Trading The Unpredictable Without Indicators by James Stanley
No Lines, No Patterns!
Is it possible to trade using no indicators at all? Here’s a five-point plan that you can apply to look for strong entry opportunities in the forex markets.
When a new trader finds technical analysis, it often leads to an onslaught of indicators added to the chart. After all, if a moving average or relative strength index (RSI) can help enter positions more effectively, another indicator or two couldn’t hurt, right? This trader will often work toward building the perfect strategy that never loses. And the trader may even go on a run of good luck in which it looks like the holy grail has been found.But indicators are not a panacea; they are merely tools that help to translate what has happened in the past on the chart. And regardless of how rigid a technical strategy may be, the past is never going to be perfectly predictive of the future.
This is why traders need strong risk management, regardless of the strategy, so that in those situations in which the market environment changes, or when market conditions aren’t optimal, they don’t lose everything they made during the good times (and then some).
But, taking this a step further, do traders really need indicators to translate what has happened in the past? What follows is a five-point plan that traders can implement to look for strong entry opportunities in which they may be able to find effective risk–reward ratios.
THE TREND IS YOUR FRIEND
We’ve all heard this saying, and while it may be oversimplistic, it’s true. Trends develop for reasons. It could be a fundamental change in an economy or a company or the result of a global positioning play; whatever the reason, trends can be desirable.