Home Trading Strategies Why You Lose Money With Trading Indicators (It’s Not What You Think)

Why You Lose Money With Trading Indicators (It’s Not What You Think)

Why You Lose Money With Trading Indicators (It’s Not What You Think)

hey hey what’s up my friend so in today’s episode I wanna talk about why traders lose money with trading indicators and it’s not the indicators fault really right indicators they have a a very bad rep right no price action is key indicators a leg indicator sock or I throw your indicators it’s cluttering your chest blah blah blah so here’s the thing right indicators they are not bad guys right is that traders adopted right from the wrong perspective and that’s why they lose money with little with it right so reason number one is this is that traders thing that indicators they are like an end-all be-all kind of tool right oh if my RS is over so let me buy and then when you lose money you blame the indicator no that shouldn’t be the way I remember indicators what I do is they simply indicate what the market is doing this simply summarized right whatever is on your price chart that’s why they are called an indicator to indicate what the market is doing so indicator itself right it’s not a strategy it’s not a system and you shouldn’t treat it as an end-all be-all and the problem with treating it as an end-all be-all right is that it makes you stop thinking for yourself for example traders right they love to trade moving average crossovers especially when they are new to trading right the fast moving average cross above the slow moving average you buy but here’s the thing let me ask you what’s the rationale behind it why do you want to buy when the fast moving average crosses above the slow moving average and if you ask this to most traders they would even know the reason why they just do it because that’s what a textbook says bla bla bla and it makes you stop thinking for yourself right it makes you over reliant on a tool that you do even understand to start with they don’t even know how moving average goes up and down can you see where I’m coming from so if you are to over relying on indicators if you treat it as the the so-called Holy Grail that’s all you need to know right then naturally you’ll lose money if indicators okay so that’s the first thing second thing right why traders lose money with indicators is because they don’t use it in the right context so what do I mean by this let me give you an example let’s say you want to race in an f1 will you take the Toyota or a Ferrari well it’s a no-brainer you pick a Ferrari because you know it is fast right it could potentially win you right in an f1 race you want take a Toyota so this is what we mean by context and likewise let’s say you are going out with your family right you want a few if you shouldn’t car which car will you pick the Toyota or the Ferrari well the Toyota right because it’s fuel-efficient right can can host more I mean it can house more people in the car as well so this is what we mean by contact so you need to use the right indicator within the right context okay so this brings me to this question right so what other types offer or rather what are the different purposes of indicators so you can use the use them in the right context right so let me share with you a few ways to use trading indicators right number one trading indicators they are useful right to help you filter down for market condition let’s say you want to trade when volatility is low in the market you can use that indicator like the Average True Range to help you define rightly current market volatility and only enter your trades during low volatility market condition or if you want to enter during high volatility market condition then make sure the ATR value right is high enough to meet your needs so that’s one example another example is that you can use the indicators right to help you time your entries for example if the if the RSI rack crosses above Tatia is telling you that there is bullish momentum coming into the market and you can look treat it as a buy signal to enter trick as an entry trigger to enter 3 right I’m not saying that when the RSI crosses above Tutera you buy media lira I’m just saying that that could be an entry trigger for you to enter a trade right instilling a valid trading setup right before you enter tree okay so the RSI only serves as an entry trigger to help you to pull the trigger to buy okay that’s why I’m coming from and also right you can use the indicators right to help you identify area of value on your chart for example in a healthy trend the price tends to you know bounce off the 50 period moving average if you see it bouncing over low two or three times right to me right that’s an area of value that the market is respecting and you can look to to buy right you can look for buying opportunities or nd 50 period moving average and that’s another way you can actually use indicators right to help you identify area of value so you can see that different indicators they have different purposes some indicators even have multiple purposes right for example moving average can help you trail and stop-loss filter for market conditions to trade it can help me also serve as an entry trigger right and much much more so the biggest takeaway here again right two things right to recap number one indicators they are not an end all be all right you need to think deeper about what your indicators is about and why it works number two right you need to use the right indicators in the right market conditions or rather the right indicators right for your own it or you don’t just in your mix and match just because your chats look good right because it aligns looks really cool no it doesn’t work that way right you need to know what is your purpose what is your goal right and then using the right indicators right to meet your needs okay so with that said I’ve come towards the end of today’s episode if you enjoyed it give me a thumbs up right subscribe to my youtube channel the buttons below click Subscribe and with that said I will talk to you soon you


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