Indicator is your enemy

When a Trader starts trading, he only believes on the indicators. Almost all the unsuccessful traders use one or many indicators in combination. SMA, DMA, RSI, MACD, Bollinger Bands, VWAP, Stochastic etc are most commonly used indicators in the market. Many novice traders believes that 20 SMA and 200 SMA cut over is a best signal, some believes that 80 RSI point is overbought position and 20 is oversold position. Some believes that exceeding Bollinger band is a best signal.

Some of the traders uses a few indicators in combination to identified the best signal. Sometimes they are successful to trade on those trading systems but in the long run they fail to make profit using those indicators.

The reality of any indicators is same and that is, all the indicators are mathematical formula of its historical prices. The indicating points are just the derivative of the recent past prices with some visual effects. If you are believing on those visuals .... best of luck.

Do you really believe that indicator works? if so, then why 90% of the retail trader fails? The history of stock market is more than 400 years old. Try to find out a single trader who has followed an indicator and became successful. If you find one, just follow him. I am sure you will not be able to....

Always remember that indicators are your enemy, because whatever you are seeing on the visuals everyone else is also seeing the same and the actions of those similar traders are also same, which creates a liquid position on those indicating position against of your trade and it gives a benefit to the big players, they use those point and eventually your trades fail. After hitting stop loss, it starts moving in your direction. You starts blame your own psychology or your trading system or your stop loss management.

However, my suggestion is not to believe on the indicators blindly. Use your common sense before trading, try to identify the points where buyers are dried out or the sellers are dried out. Take trades accordingly. Do not jump into the guns ...... I believe you will become a successful trader soon.

Have a safe trading........

Comments

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