Trading Forex Without Indicators

forex-indicators.jpgMany people think trading without indicators is impossible. They have to putting indicators such as moving averages, MACD, Bollinger Bands, etc on their charts, that they can’t see all the important information that they are blocking with these indicators.

 

Let’s start off with the major problem when trading with indicators. They are lagging by nature! I know that when you back test an indicator like stochasics, it looks amazing, doesn’t it? This is what I like to call false knowledge. In back testing, it appears that each time the fast and slow stochastics lines crossed each other, it was the exact point where there was an upside or downside swing.

 

I could see why so many traders would be attracted to this. In back testing, most of them will looks amazing and looks simple. Just buy when two lines cross each other on the way up, and sell when they cross each other on the way down.But remember when back testing, you can’t see how many times those two lines crossed each other, only to revert back. You see, in back testing, you don’t get real time results.

 

The other problem I have with these indicator driven systems is the fact the you don’t need to look at the price. For moving averages, or stochastics, you are just waiting for a couple of lines to cross. The price is irrelevant. The truth is understanding price movement is probably the best thing you can do as a technical trader and always believe on forward live test, don’t believe the backtest.

 

 

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