A famous Einstein quotes is “Everything should be as simple as possible, but not simpler.” I am a big fan of the quote, and I think it is one of the secrets to good trading.
Have a look at the following picture. This is a screenshot of a chart from a system I used to like trading. While it may have been profitable, it is clearly a long way from being as simple as possible.
I spent many years in the pursuit of effective indicators, and my experience has been that the indicator route is a bit of a rabbit hole.
Very quickly you can hit overwhelm status and find it hard to make your way back to a straight-forward system that is both clear and effective.
Throughout most of my development I considered learning to trade with indicators a rite of passage, but I now believe that using indicators isn’t keeping with the adage of being as simple as a system could or should be, and so they may not be the right of passage I once thought.
Having said that, every trader should have a good understanding of the various types of indicators available, and understand how they are used and what information they are said to convey. That is the only way I see them as a rite of passage, to be used as a tool to educate yourself about the innumerable dynamics of the market.
The reason for this is that understanding what an indicator is doing helps us understand a little more about the market each time, and that knowledge can then be integrated into your own system.
Even if you don’t use it in your system, the understanding will provide the right foundation for your growth as a trader.
Other than not being as simple as possible, the other problem with indicators is that they always lag price.
Because of those things, my system uses only price action to determine entry and exit criteria, and (almost) uses no indicators whatsoever.
My only exception is a tool I use to filter the market for the strongest current trends.
At any time when you are looking for a setup with my system, it is strategically crucial to be only focussed on the best current trends across all relevant markets and all relevant timeframes.
What this means in a practical sense, is that if a setup occurs in a market that is not on my leader board of trending high achievers, I don’t even consider it - and you shouldn’t either.
The tool I use to filter for the strongest trends at any moment is called Forex Trendy.
There are plenty of free indicators for MT4 that you may be able to use to filter for the best current trends, but I haven’t found one that is satisfactory.
If you choose to run free indicators in MT4 you will need to have multiple charts running simultaneously which will drain your computer resources. There will likely be other issues that pop up for you but it can be done.
Over my trading history I have preferred IOS applications to MT4, but now that I have ditched my iphone for a better VR experience, I don’t have a choice but to use something that displays in a browser window. I think that at only around $12 a month, I wouldn’t be without Forex Trendy.
Forex Trendy enables me to select my most favoured specific timeframes, my preferred markets, and to locate up to 20 charts with the strongest trends for those timeframes and markets.
Considering that just five timeframes (eg 5m, 15m, 30m, 1H, and 4H) and 25 markets would provide you with 125 charts requiring analysis in order to determine which were trending the strongest, and you will easily appreciate that a tool which automatically finds the best of them and places them in trending order is pretty helpful.
Forex Trendy also measures the largest recent pullback as a % of the current move, which is a really great objective way of placing markets in order of the strongest trends to weakest trends.
