The last 10 or 15 years of trading has been
quite interesting. Obviously technology has had a major impact on just about
every facet of the world. It's not any different in trading. But has
it really helped us?
One thing is obvious, is that we have a lot more
toys at our disposal than ever before. This is doubly true for indicators.
Even the free charting platforms, have hundreds of different kinds of indicators at
your disposal. But do these actually benefit you?
In this forex trading tutorial, I will go over
all the negatives that trading indicators have.
They are all
lagging: It's true, they are only telling you what you already know.
For example, the stochastics indicator. When you see the two lines cross upward and downward
signifying a strong move one way or another, the move has already happened.
The indicator is too late to the party. As opposed to something like forex price action, which provides a trader leading
No one really knows what any
of them do: If you ask most traders about your basic
indicators like stochastics, MACD, RSI, etc... most can tell you about how to use them
for a mechanical trading system but if you are looking for a deeper understanding of what
they do, chances are most people don't have a clue. They'll usually just tell you
that they'll buy when the two lines cross each other. That's about the extent of
If they are so useful, how come so
many people are losing money?: Seriously, since indicators are supposed to
be tools that are 100% mechanical, why are there so many people struggling? The trading rules
should be somewhat universal, yet there are only 5% of forex traders actually making
money. That's something to think about.
You are only as good as your
indicators are: When you use indicators, you are going to live and die by
them. This basically means that all traders are created equal, and you better hope your
indicators are having a "good day" reading the market, otherwise its going to be a long day for
You are not even looking at the
price: Don't you find it kind of strange that technically you don't even have to
look at the price of the currency, when you use forex
scalping indicators? All you are really waiting for are all your indicators to line
up. The price is really not that important, if you go by that rationale. When you think about it
like that, it is kind of absurd, don't you think?