There are hundreds of indicators on the market, but the truth is that only a few indicators really work. Almost all indicators fail when it comes to testing and analyzing price data in real time. Obviously, this is something that few people are willing to talk about because there were no alternatives in just a few months.
Most indicators simply do not work because of the way they were designed. There are two issues that most technical analysis techniques have today:
Signal delays or Lag
Signal noise is one of the biggest problems with most indicators. The reason is that they are mostly based on the closing price. The closing price changes whenever a symbol has an increase or fall. As an example of how a noisy indicator like the moving average or the RSI is. If you take a bar of 60 minutes in an actively traded symbol, you can easily have a couple of thousand fake signs in a single bar. This is an important issue that technical analysis needs to overcome.
Signal delay is another big problem. Most indicators need to look back at least a couple of bars, but that means relying on old data. The more you look back at the stability of the signal, the more the indicator is at the current price. One of the other issues that the signal delay is caused is the solution to the signal noise. Most indicators only allow you to calculate the indicator after the completion of a slash. This clears the signal noise, but the signal has extreme delay problems.
The solution to most technical analysis questions issues comes from a new class of technical analysis and indicators. These are called Reasons of Shift Theory. What they do is to focus on the data that counts and is responsible for creating trends. Some examples of the data that count are:
Above trend markets, typically, a number of high and higher high levels.
The low tendencies normally the markets have low lows and low high levels.
Choppy markets have a high percentage of overlapping bars.
Most trends have certain price features and it is not where the current closing price determines the trends. For a market to rise, it must make further increases. For a market to go down, it needs to do casualties. Meanwhile, most closing price data is producing noise.
In the end, The Reasons of The Shift Theory Ratios are the best indicators of daily trading because they only focus on the data that count. Shift ratios are not only accurate, but they have very little noise. The price indication only reacts to bars that make ups, lows and overlap percentage. All of this data is divided into easy-to-read lines that are color-coded as follows.
Green = Measures the strength of the trend.
Red = Measures the strength of the trend
Yellow = Measures choppiness by the percentage of overlapping bars.
Source by David Zielinski