Thursday, July 2, 2009
The Simpler the Better?
A lot of people trade using lots of indicators. Some trade using Forex robots or Expert Advisors that are based on indicators as well. But there is a school of thought that says that trading using indicators has a big disadvantages.
Disadvantage number 1:
Lots of indicators will clutter the screen and in the end, we will not be able to tell what the market is really doing and what direction it is really going and we end up making the wrong decision. All thanks to the whole lot of indicators that are supposed to help.
Disadvantage number 2:
The indicators lag. Most of the time, when the indicators have shown a nice tradable move in the market, the move would have already reached its end when it is revealed by the indicator and trading based on the indicator would be unwise. Although sometimes the indicators do predict the correct subsequent moves.
Therefore, some people think believe that using just 1 or 2 indicators would be enough, and then based on them, a system is developed and the traders would just stick to the system with discipline.
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