As technical analysis depends on indicators to predict the movement of a stock , why a particular indicator fails. a) after some time of use in the market b) for particular stocks ?
Asked by Rashmi Ranjan Behera Last Modified
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Siddharth Shetty
Full Time Trader and Stock market enthusiast
Let me clear two assumptions for you now1. All indicators either follow the price or lead-based on momentum but are dependent on the underlying stock. A stock with a clear trend and behaviour will also have signs which will give clear direction.2. Every symbol has an active working percentage which is...
read more Let me clear two assumptions for you now1. All indicators either follow the price or lead-based on momentum but are dependent on the underlying stock. A stock with a clear trend and behaviour will also have signs which will give clear direction.2. Every symbol has an active working percentage which is not stagnant. Like RSI can provide you 70-80% accuracy on a trending market, but if the market is sideways it's skill might go below 40% So after you've understood the above, it's pretty simple. For your question a) it may be because the market dynamics have changed and hence the indicator is less useful for the current scenario.b) the index will always be based on the underlying stock, so if the stock is manipulated or has unclear/choppy trend, the indicator will also give ambiguous results. read less
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2 Comments
It is no indicator that fails in the market; what goes wrong is our view. Technical Analysis is based on certain assumptions as well as probabilities, not certainties.One should understand the logic (maths) behind the formation of a particular indicator. Some would be leading, and some are lagging. Based...
read more It is no indicator that fails in the market; what goes wrong is our view. Technical Analysis is based on certain assumptions as well as probabilities, not certainties.One should understand the logic (maths) behind the formation of a particular indicator. Some would be leading, and some are lagging. Based on your view and time horizon, you have to use the Indicator. read less
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Prakash Gantori
Banking & Finance professional with over 20 years of experience
Depending on the major changes in the fundamentals of a company, the stock will move accordingly irrespective of technical data. I would always advise you to look at multiple factors and hedge your intraday or positional trades rather than taking one side views. In this way, even if your view goes wrong,...
read more Depending on the major changes in the fundamentals of a company, the stock will move accordingly irrespective of technical data. I would always advise you to look at multiple factors and hedge your intraday or positional trades rather than taking one side views. In this way, even if your view goes wrong, your loss will be limited. read less
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My personal suggest do not use any indicator, learn support and resistance, channels, trend line.
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Technical indicators fail most of the time. They are designed to make your trade often favouring the brokers. Price is the most important technical indicator.
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Indicators depend on price and volume, and momentum. When a trend is intact, indicators behave accordingly and provide good signals. But when the price moves too fast, either way up or down and reverses too quickly, indicators take their time to respond. That's it. Indicators don't fail; they just take...
read more Indicators depend on price and volume, and momentum. When a trend is intact, indicators behave accordingly and provide good signals. But when the price moves too fast, either way up or down and reverses too quickly, indicators take their time to respond. That's it. Indicators don't fail; they just take time to adjust to fast reversing or fast-moving prices. read less
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Technical Indicators are not a tool used to buy and sell. It acts as an additional confirmation for your method or strategy. Note it's an additional confirmation. The BEST indicator to use is PRICE. Price is the best indicator, and then the Volume.Before any indicator, price gives confirmation. OPTION...
read more Technical Indicators are not a tool used to buy and sell. It acts as an additional confirmation for your method or strategy. Note it's an additional confirmation. The BEST indicator to use is PRICE. Price is the best indicator, and then the Volume.Before any indicator, price gives confirmation. OPTION CHAIN will also give you an indication, better than any indicators. Never Rely on Indicators. If it were so easy to make money in the Stock Market, then 90 % + people wouldn't have lost money. ☺ read less
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Technical analysis based on the data points of a stock's price movement with time and volume. Hence the indicator you are using, it's giving the future prediction price based on the previous history of the market. Indicators are tools, so you need to understand the price action of stock with multiple...
read more Technical analysis based on the data points of a stock's price movement with time and volume. Hence the indicator you are using, it's giving the future prediction price based on the previous history of the market. Indicators are tools, so you need to understand the price action of stock with multiple time frames before you insert any indicator. I hope you can find every time the result will vary hence your future price too. You will get a better identification of price momentum. read less
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Indrakamal Tiwari
Trainer-NISM Technical analysis Fundamental Analysis
Every system has limitation/ Only trading psychology, and money management can give profit / successful trader known very well
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Raja
Equity Options Trader for more than 10 years
There or other factors influencing the Market/Stock prices. Like Geopolitical news, Economic status, liquidity issue. For individual stock, it will react depends upon its problem. So, Indicator is one supporting tool. We, cannot take decisions solely on indicators alone.
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