Use or not to use indicators for trading

Let's look at the word indicate the Oxford dictionary says it means to point out or show, and also it means to suggest a desirable or necessary course of action.

So an indicator points out or shows the general trend of the security or forex pair being traded. Or it points out that it could be a bullish or bearish or even a sideways market. So now what is a lagging indicator or leading indicator?

According to the Cambridge Dictionary, a lagging indicator is, it shows what the situation has been like in the previous days weeks or months example of this is the unemployment rate which is a lagging indicator of the overall economy's performance.

A leading indicator according to the Cambridge Dictionary shows what the situation will be like in the future such as claims of unemployment insurance, a leading indicator for the economy. Do we really have a leading indicator? No, otherwise we would all be multi-billionaires, and probably all of us would be broke. The point is it only shows us the possibility of what could happen if the market stays bullish or stays bearish or if it will change.

My favorite indicators are the SMA, which always shows a trend if the market is bullish or bearish, the Stochastic oscillator because it shows the movement of price as well as if the market is moving into a bull trend or bear trend, even when it sideways but then it does not indicate very well. I also like the Commodity channel index because it does the same thing as the stochastic but it can be in conflict with the stochastic as well. I always work on when all indicators are in agreement then I work out entry and exit points. normally I use 3 indicators and if 2 out of 3 are ok then its a maybe and I wait for confirmation. In my experience, if go against the CCI or stochastic then the trade goes all wrong for me. Another one of my favorites is chart patterns they do not lie. Now chart patterns are always there. The amazing thing is children see patterns easier than adults because we as adults have been so conditioned that we do not see patterns anymore. Hence why trading is simple but difficult.

When I first started trading I thought it would be easy as pie with all these indicators just like a science experiment it was clear cut and follow from one step to another as you analyze your steps and results at each step.

Well, I got a real shocker when I saw that there was more to the eye in trading. If you do not know what you are doing and you are not prepared to lose money your heart will go into arrested mode. I realized then I must prepare to lose and I then tried to learn everything I could, I even tried to learn all the candle formations, which is impossible. It was like learning the dictionary by heart. All the indicators too I really felt overloaded with all this info. Then it dawned on me that I must pick what I felt comfortable using. My charts looks like Donald Duck drawing all over it with different colored pens. As time went on and reading more about trading, learning from various books that the charts did not need to look over complicated, it started making more sense to me. Now as I am attending the trade room sessions every day I get a clearer picture. Listening to them makes me feel at ease because they have done exactly as I have done but in time one learns to simplify the charts to trade correctly.

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Lets learn together how to trade at Stock Markey College.

Amateur Pete