So if the last post was a little boring I hope you can wait for "the juice". In other words, what made me change from a hopeful, hard working loser into a consistent profit maker.
I stopped using indicators. As usual, a simple phrase like that hides a multitude of details. Sometimes you will find a successful trader who uses indicators. They will know how the indicator works, what it relies on and, therefore, when it is not reliable. In other words, they are using it as a tool. In an ever changing market there is no real substitute for the human brain. After all, the market is human brains. What chance does a trading robot, so called "expert advisor" have, really, with a set of rules limited by the time and intelligence of a human programmer, using information from the past?
So you can use indicators as a tool. Here's an analogy. Give a circular saw to someone who has no concept of tools. You tell them it is a cutting tool and leave them to it. If they don't cut their fingers off they will likely damage it cutting metal, stone or whatever it wasn't designed for. So I think that is quite a good analogy.
Some indicators just tell you if the market is going up or going down. Some even have an arrow to tell you it's going quite fast now and it's time to buy or sell. Let me tell you, that's often the time when you should be doing the opposite. But they can work, like an hour later, when you have already closed the trades, disappointed that the market did not immediately give you a profit and that's when you look at the chart and slap your forehead and say well, the indicator was right that time but I chickened out because I couldn't endure the draw down. Steer clear of these indicators:
Above is the "Golden Madro". Just "Mad" would have done for the name, really. It's a combination of ma crossovers, strength and what have you. How could it be so wrong? Well, the market wasn't right for it, that's obvious. So the answer to the sum is that we have to know when the market is maybe going to be right. Then, when we know that, we take our chances with an indicator, or even better, our brains.
I have a few indicators which I wouldn't be without. I'll let you know what they are for in the following posts. You must realise that these suit my style of trading and may not suit yours but hopefully these will give an insight into what we should be looking for in the market and what probability to aim for.
I stopped using indicators. As usual, a simple phrase like that hides a multitude of details. Sometimes you will find a successful trader who uses indicators. They will know how the indicator works, what it relies on and, therefore, when it is not reliable. In other words, they are using it as a tool. In an ever changing market there is no real substitute for the human brain. After all, the market is human brains. What chance does a trading robot, so called "expert advisor" have, really, with a set of rules limited by the time and intelligence of a human programmer, using information from the past?
So you can use indicators as a tool. Here's an analogy. Give a circular saw to someone who has no concept of tools. You tell them it is a cutting tool and leave them to it. If they don't cut their fingers off they will likely damage it cutting metal, stone or whatever it wasn't designed for. So I think that is quite a good analogy.
Some indicators just tell you if the market is going up or going down. Some even have an arrow to tell you it's going quite fast now and it's time to buy or sell. Let me tell you, that's often the time when you should be doing the opposite. But they can work, like an hour later, when you have already closed the trades, disappointed that the market did not immediately give you a profit and that's when you look at the chart and slap your forehead and say well, the indicator was right that time but I chickened out because I couldn't endure the draw down. Steer clear of these indicators:
Above is the "Golden Madro". Just "Mad" would have done for the name, really. It's a combination of ma crossovers, strength and what have you. How could it be so wrong? Well, the market wasn't right for it, that's obvious. So the answer to the sum is that we have to know when the market is maybe going to be right. Then, when we know that, we take our chances with an indicator, or even better, our brains.
I have a few indicators which I wouldn't be without. I'll let you know what they are for in the following posts. You must realise that these suit my style of trading and may not suit yours but hopefully these will give an insight into what we should be looking for in the market and what probability to aim for.
Gone to a better place