Or is it the other way round? It doesn’t matter, because an indicator is the same as an oscillator. Swing and trend trading seem to imply something here, but both are fixed trading system algorithms, mostly defined in simple formulas. Eventually they are the materialized believe that there is the holy trading grail.
The financial markets are complex machines. They could be described as a network of positive and negative feedback loops, random generators. Additionally there is some reality mixed in – the real and ever changing but virtual and unknown value of something. The market produces the price, and the price is what the technical trader trades.
Searching for the right formula, a trading system condensed into the indicator or the oscillator, may mean ignoring the market mechanisms. An indicator is a hardcoded set of parameters that rarely match the changing mix of the above mentioned causes and the unforeseeable events that modulate their price driving influence.
Indicators work great in hindsight. Picking a chart and running a backtesting algorithm to optimize the secret trading formula, means redrawing the price curve implicitly in a different coordinate system.
The newly found oscillator or trading formula is not worthless, but it is orders of magnitudes less efficient than most people believe or than it looks at the first glance. And it can’t be different. If it were, hordes of gamblers would make tons of money with their simple trading indicator slot machine and that is impossible. Every regularity that can be found and then crystallized into some hardwired trading machine has to vanish soon, otherwise everybody had to win.
Is it really impossible to find a fixed trading system, a program that works on average and takes money out of the market as soon as the price is moving like a windmill starts rotating as soon as there is some wind?
The abstract answer is probably, yes there is, but it has to be different then trading systems known to everyone. It also should tend to be a simple system instead of a complex formula. Putting energy into complexity of many parameters has to be replaced by a greater flexibility or creativity of what actually is seen as an input parameter.
Finally elements that transform an indicator based program into a sculpture of the important discontinuities are interesting.
