There is no such a thing a best trading indicator. I learned it a hard way đŸ™‚

If you want to use indicators in your trading you can. There are traders who are profitable and they are using specific indicators. If you want to use indicator in your trading that’s fine. Still, there are some things that you should be aware of.

1.Price action vs indicators

Learn price action rules, price patterns, candlestick patterns. If you know how to read the chart it’s much easier to use indicator as a form of confirmation/signal or whatever you need it for.

Remember. Almost all indicators are calculated based on price.

If you want to learn more how to read charts then I recommend sources like:

2Higher time frames vs indicators

Higher time frames gives you ton of information about potential support, resistance levels, trend, possible reversals and so on.

Start from checking higher time frames, mark important levels, read the room as they say, and then on lower time frame use your indicator to entry position.

3.Indicators for signal or situation overview

There are two main use cases for indicators:

  • source of signal to open / close trade
  • to read better current market conditions and act based on other inputs (price action, trend lines etc.)

Example of indicator as a source of signal. Buy signal when stochastic crosses from below 20 level.

Example of indicator used to read market situation. CCI is way above 400 level meaning market is getting strongly overbought. RSI showing divergence when price makes new lows meaning that reversal/correction from that level is possible.

4.Combine indicator with other information

If you want to find the best indicator that will work with your strategy then learn how to combine that indicator with other information.

The main trap here is situation when traders search for indicator that will give them best entry and exit signals. And they want to build the whole strategy based only on that indicator. No chart, no price action, no news etc. Just my indicator.

That’s a huge mistake. If you want to trade with indicator learn how you can use it together with other tools/information.

Few examples below

  • Combination of indicator and higer time frame – you analyze multiple time frames and make decition on lower time frame
  • Combination of indicator and Pivot Points – you use Pivot Points based on different time frames and use indicator to open a position when price is near specific pivot level
  • Combination of indicator and Fibonacci tools – you use Fibonacci tools to find important retracement and extension levels. Next you use indicator to open a trade

To sum it up

Do not waste time to search for that one and only indicator that is the best and will give you best results anad make you rich. Learnd how specific indicator work, how you can combine it with other information you have either based on price action, other time frames etc.

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