Do indicators really work? (2024)

FAQs

Do indicators really work? ›

Indicators provide information ONLY

This is what indicators really do, and it's their one and only purpose. Indicators provide information about price, how price has moved, how candles have shaped and how recent price action compares to historical price action.

An indicator is not a trading strategy. While an indicator can help traders identify market conditions, a strategy is a trader's rule book and traders often use multiple indicators to form a trading strategy.

Indicators are not crap they're just another tool in your toolbox. Indicators are only confluence. They are programmed tools telling you what just happened in the market. It is good to take it into consideration.

This essentially means the indicator lags the price action after the event. The two most commonly used of these indicators are the simple moving average (SMA) and the moving average convergence divergence (MACD). An SMA indicator can fail by leading you into losing trades if the price reverses unexpectedly.

Stochastics are a favored technical indicator because they are easy to understand and have a relatively high degree of accuracy. It falls into the class of technical indicators known as oscillators. The indicator provides buy and sell signals for traders to enter or exit positions based on momentum.

Professional traders combine market knowledge with technical indicators to prepare the best trading strategy. Most professional traders will swear by the following indicators. Indicators offer essential information on price, as well as on trend trade signals and give indications on trend reversals.

Which indicator has the highest accuracy? The Moving Average Convergence Divergence (MACD) indicator is often considered one of the most accurate technical indicators. That is because it uses a combination of moving averages to spot potential buy and sell signals.

What is the number one indicator in TradingView? ›

As most of you know, the Moving Average Convergence Divergence, MACD, indicator is a one of the most popular indicator among traders. The MACD is a trend-momentum indicator that measures the relationship between moving averages and uses a signal line to show crossovers between the...

RSI and Stochastic Oscillator

These indicators measure the supply and demand for the asset. You can find out when the market is overbought and oversold to get an early start on predicting when there will be a price reversal. They work for both entry and exit in the forex and CFD markets.

Causes of indicators not working

Indicator bulbs can often blow from old age, excess vibration or a faulty regulator in the alternator that causes high car battery voltages and over charging of the cars battery.

While learning about market indicators and their use is very important for new traders, the basics of how to read price action should not be overlooked, because after all, a trade starts and ends with the price, and most indicators derive their data from price alone.

The consensus is that about five trading indicators should be the right balance between enough information to make informed decisions and not too much so that you suffer from information overload, aka paralysis by analysis.

All those indicators do nothing but distract you. Since all indicators are a derivation of price, price is the only thing you need. And I don't mean candle stick patterns, harmonic patterns, or support & resistance trendlines.

Many traders choose to trade without using any indicators, instead, relying on the price action analysis. This can be a successful approach that will fetch you a whole lot of money in the financial market.

Any indicator does have not 100 % accuracy, indicator only has 70-75% of accuracy . Don't only focus on indicators, also focus on chart reading and price action.