Just like many traders I am sure, I have fallen into the trap of thinking/hoping that there is some indicator out there that can offer me an edge. I do believe that indicators are very useful for trading but I don't believe the indicator itself is what offers an edge as much as it is your ability to read and understand price action, relative to that indicator.
Being able to read price takes a lot of patience and practice and I don't believe it can be replaced by some "guru" trading class or special indicator. Sure, those things can help point you in the right direction but ultimately, successful trading is all about being able to read what price is doing so you can accurately forecast what price is likely to do next. Mastering this skill simply takes time and a lot of it.
Only recently have I started to understand what this really means as I've been able to get a sense for what price is going to do next, simply by watching what it is doing and has been doing on my charts. Instead of waiting for my indicator to tell me exactly what to do, I've been more willing to pay closer attention to what price is telling me and then acting accordingly, regardless of what the indicator is saying. Now, I am not suggesting we throw our indicators out the window (however less is more in my opinion) but in my experience, relying more on price when making decisions is superior to relying on an indicator.
Understanding how to read price takes practice and lots of experience. I still have a long way to go myself but lately I've really started to notice the benefits of all of the experience I've been accumulating over time. Most importantly, my bottom line is also starting to reflect this reality and this is the point in the first place.
Stan, That's a right-on post. I've been reading charts full-time (YM) for close to 3 years now and the more I do it the less I care about indicators. Reading price action is priceless and you can get all the info you need from a library book. But of course few people ever realize this until they've spent thousands on courses and seminars. It's such a common theme in many traders..."if only I knew then what I know now" and it is NOT about indicators. Price itself is the only indicator that never lies, and it never lags either.
Posted by: Chuck (YM-Trader) | November 06, 2009 at 03:01 PM
Hi Chuck - thanks for stopping by my blog.
Posted by: Stan | November 06, 2009 at 05:24 PM