There Is A Right And A Wrong Way To Use Indicator To Trade In The Stock Market

Do yourself a favor and stop believing that the indicator you have been using for the past year is 100% accurate and reliable. Even if you have profiting out of it, make sure you look at how exactly you are interpreting it. Do you really believe that the market will follow what your 14-day average RSI is showing you at the moment? And what about the other guy, who uses a 10-day RSI, why the stock market shouldn’t follow his indicator, not yours?

Do you see my point? The stock market does not care about your or anyone’s else indicator as a matter of fact. The stock market will do whatever it wants to do regardless of how many precise and omnipresent indicators are telling that what it is doing is not only wrong, but it should not be happening. There is no reason at all to believe that an indicator has such a prediction power. It doesn’t and the sooner you realize that, the better off you will be.

Do I use indicators? Yes, I do. But I do not use them with those standard and set guidelines that you can found anywhere on a half-decent blog that someone, who I do not know how much study they have under their belts, has created. As everything, there is a right and a wrong way to use indicators. The wrong way is to believe that your indicator is 100% accurate and follow the standard guidelines found on the web and forums.

The right ways is to do a proper and full research on it to really understand why certain indicator behaves the way it does. Go out there, select and indicator and then read everything you can about it. Check the creator’s and author’s books in this matter and how reliable are them. Do not skip the part where they show you how an indicator is constructed: this is by far the most important aspect that you should be paying attention to. And then, and only then, go out and try to trade with them.