Why Indicator-based Trading Strategies Don’t Work

Getting rich without doing anything is a dream of every second person in the world. So, Forex trading is like a hot cake for many people as they think getting master in this particular field could give a reality to their dream. So, different kinds of strategies are adopted in order to succeed in the game. But it isn’t necessary that all of them are always proved to be right.

Many novices think using lots of indicators could do the job and so they keep on wasting their time on indicator-based trading strategies. Before discussing indicator-based strategies further, we would like you to understand the role of indicators in the Forex trading.

Technical indicators aren’t a whole trading system, instead are small components of a system. They account for only 10% of trading success and not more than this. We have seen many people saying they have tried that and this indicator but nothing seems to be working well.

Why-Indicator-based-Trading-Strategies-Dont-Work

The trend following isn’t based on support lines and resistance lines, nor on the areas of congestion. It is also not based on the golden mean, Fibonacci numbers, nor is it associated with the works of Elliott or Gann. Here’re a few indicators that aren’t used in the trend following;

  • No RSI
  • No OBV
  • No Bollinger Bands
  • No ROC
  • No MACD
  • No Momentum
  • No Stochastics
  • No P/E ratios
  • No Advance / Decline Lines, etc.
  • No Williams %R

And many others

These technical indicators are especially designed to forecast how market will behave. It’s not necessary that they will predict correctly because they aren’t a projecting trading system. Trend following employs a reactive, straightforward technical indicator as a part of the overall trading plan. Long Term Trend Following is the only right method for trading as it reacts to the Market.

Mostly, those who are new to Forex Trading like making things overcomplicated as they think going with complex trading strategies could do the job. But simple trading strategies are always good. Without the clutter of technical indicators, you could better trade in a smart way, doubling and tripping your profit.

It has been observed with many successful traders that they don’t consider relying on lots of technical indicators as they like to go with something unique in their own minds. Using a simple strategy for trading allows for you to enjoy quick reactions without having to take much stress.

If you are new in this game, you should use simple and effective strategies to identify the trades and always try to stick with this approach. This is how you could prevent your hardly-earned wealth from getting lost. So, it’s highly recommended that every beginner should consider going with simple trading strategies if they want to succeed in this complicated market.