Did you know there are currently more than 100 technical indicators that you can use when trading Forex? Most charting software programs and packages available will provide all of these indicators to you — but the most confusing question is always: which ones should I use?
There is no magic in technical indicators in and of themselves as they each can tell you something about the market’s behaviour at any given point in time. Nor is it true that any one indicator is better than another.
What is key to using technical indicators successfully is to select only a few that complement one another and use them in an uncommon manner along with powerful trading tactics.
Most trading methods share the technical indicators they utilize for identifying potential trades — the key to being successful with these indicators is to understand their application and their impact on the selection of trade.
The tendency for many amateur traders, however, is to over-complicate this process. They want to use too many indicators or patters, and they think that success is dependent upon something being highly complex. Nothing could be futher from the truth — in fact, simple is better:
1. Using too many or the wrong indicators is counterproductive, as the information that those indicators provide is counterintuitive and just plain misleading.
2. Using a few simple indicators in a uniquely powerful way can provide the right information necessary to make good trading decisions.
3. With the right indicators and patterns, you will be far more likely to trade with discipline because you will be able to understand an objective set of rules that the right indicators and patterns can provide.
In short, you are best off keeping it simple and applying a smaller set of indicators to identify the best possible trades — and avoid making ‘complexity’ a qualifier for determining whether a method will work or not. You’ll likely find that the simpler the method, the more successful you’ll be with it.
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