"I trade like I bath" - the words of a self-created guru trader who wanted to convince me to join his "Premium Group" a while back.
Although by his very nature the gentleman was a scammer and made more money through "teaching", those words lead me on a path which to a greater level of certainty in my own trading and analysis. (By the time we had that interaction I had spent 100s of hours trying to decode the secret "code" and logic in the markets through the use of countless mathematical indicators.)
It is with that experience that I add to the Indicator vs naked chart debate.
Firstly I believe that majority of strategies work( indicator or no indicator) and I have found that human beings have certain behavioral traits that if worked on correctly, will result in success. Dont get me wrong, yes there is propaganda and some illogical methods of analysis and yes there are some people who are not meant to be traders, but I have found that the reason 90% of traders I have met have changed their strategies is due to lack of understanding, psychological factors etc. ("We'll talk about this some other time") but NOT whether the method works or not.
Back to topic,does trading with or without an indicator give anyone anyone an advantage?
1. I have found that mathematical indicators have their flaws in that they lag price action and are not effective as market timing tools.
However, I believe and I have discovered that if used as a confirmation tools for a proper price action trading plan (Notice I didn't say candlestick patterns, more on this later), they can give a trader an edge so to speak and give an additional level of confidence in trade selection if ofcourse the indicator is being interpreted in the manner originally intended.
2. I have also found that price action in itself, not knowing different candlestick patterns or chart patterns but a proper understanding of the ebb and flow of the market and the psychology of majority of traders is enough on its own. Simply understanding why the price of something is going up and down i (I refer you to your high school economics textbook for this) coupled with the ability to leave your emotions at the door is enough to make money consistently. More and more traders don't realise that the key to understanding price movement is in exactly the manner in which they buy groceries (I promise to write about this later too :)).
What's the conclusion?
A proper understanding of price action before using indicators is essential for the success of any trader, without an understanding of price the trader is lead into believing that indicators can predict price action while the indicator in itself is just a mathematical formula based on previous data which in my opinion is the quickest way to burn through your capital.
I recommend anyone struggling with understanding the business of trading to take a step back; (refer to the very first thing taught in econ101 and learn how the market auction system works (many books exist
Those who call themselves "diehards" and are adamant that indicators are the best tools to have and one can use them with only an understanding of price action (NOT candlesticks); I have one request, please remove the candles off your charts and send me your analysis based on your magic 8ball indicator stochastic rainbow MACD TDI EMA strategy.
My Name is Mutondi , price action trader; I sometimes use an indicator (MA) but I can do just fine W/O.
Although by his very nature the gentleman was a scammer and made more money through "teaching", those words lead me on a path which to a greater level of certainty in my own trading and analysis. (By the time we had that interaction I had spent 100s of hours trying to decode the secret "code" and logic in the markets through the use of countless mathematical indicators.)
It is with that experience that I add to the Indicator vs naked chart debate.
Firstly I believe that majority of strategies work( indicator or no indicator) and I have found that human beings have certain behavioral traits that if worked on correctly, will result in success. Dont get me wrong, yes there is propaganda and some illogical methods of analysis and yes there are some people who are not meant to be traders, but I have found that the reason 90% of traders I have met have changed their strategies is due to lack of understanding, psychological factors etc. ("We'll talk about this some other time") but NOT whether the method works or not.
Back to topic,does trading with or without an indicator give anyone anyone an advantage?
1. I have found that mathematical indicators have their flaws in that they lag price action and are not effective as market timing tools.
However, I believe and I have discovered that if used as a confirmation tools for a proper price action trading plan (Notice I didn't say candlestick patterns, more on this later), they can give a trader an edge so to speak and give an additional level of confidence in trade selection if ofcourse the indicator is being interpreted in the manner originally intended.
2. I have also found that price action in itself, not knowing different candlestick patterns or chart patterns but a proper understanding of the ebb and flow of the market and the psychology of majority of traders is enough on its own. Simply understanding why the price of something is going up and down i (I refer you to your high school economics textbook for this) coupled with the ability to leave your emotions at the door is enough to make money consistently. More and more traders don't realise that the key to understanding price movement is in exactly the manner in which they buy groceries (I promise to write about this later too :)).
What's the conclusion?
A proper understanding of price action before using indicators is essential for the success of any trader, without an understanding of price the trader is lead into believing that indicators can predict price action while the indicator in itself is just a mathematical formula based on previous data which in my opinion is the quickest way to burn through your capital.
I recommend anyone struggling with understanding the business of trading to take a step back; (refer to the very first thing taught in econ101 and learn how the market auction system works (many books exist
Those who call themselves "diehards" and are adamant that indicators are the best tools to have and one can use them with only an understanding of price action (NOT candlesticks); I have one request, please remove the candles off your charts and send me your analysis based on your magic 8ball indicator stochastic rainbow MACD TDI EMA strategy.
My Name is Mutondi , price action trader; I sometimes use an indicator (MA) but I can do just fine W/O.