2 indicator, or not 2 indicator

Beginner Questions
1

Hello all.

When I started out in Forex, I went on the search… you know the one… for the “Holy Grail” indicator. The one that tells me when to buy, when to sell… when to stay flat.

Initially, indicators were helpful for me as I had never really studied a chart before and it allowed me to see what was not imediately obvious at the time.

However, after some time I came to 2 realizations.

  1. An indicator only confirms what I should have already done (lagging), or alerts me to what I may want to watch for (leading). In other words, pulling the trigger because an indicator told you to has a great potential to land you some negaitive pips.

2)An indicator is only going to tell you what the price action (the most basic indicator) has already told you.

I could be alone in this, however I realized that the indicators were getting in the way of being able to really “see” what the charts were already telling me!

This isn’t to say that I don’t use them anymore. I still have some charts with indicators, however I trade from a clean chart. I use the indicators as I believe they were meant to be used, to compile the data into basic designs that are easy to read at a glance.

By the way, last night (Jan. 5th, 2008) the Eur/Usd dropped like a rock. In all honesty, who knew that was going to happen before it did?

I had a very strong suspicion of it and went short at 1.3876 about an hour before it happened and bagged 219 pips from the move.

I hope this has been helpful, and my simple advice is; look at a clean chart from time to time, you may be surprised at what you “see.”

I recommend the H1

May you be rolling in pips

2

I’m curious, what do you use? And what is your trading style? Are you a scalper, swing trader or something in between?

I myself only use stochastics, TRO’s sweetspot lines and watch the candles.

3

I’m not entirely sure what those terms mean exactly. I go for the larger moves, but don’t care to hold a trade overnight (US daytime) while sleeping.

TRO is awesome and has some really next level stuff, but I don’t use it anymore. I use candles and chart patterns mostly.

The indicators I have and use sometimes at a glance are moving averages and bollinger bands.

I watch for three things;

Reversals
Retracements
Consolidation Breakouts

I trade primarily from the H1, though sometimes find entries and exits from the M30 and M15

4

So… are you scalping that range on the EU right now?

5

I’m not currently watching any EU pair and I don’t scalp, at least not anymore. Tried it for a couple of weeks with mixed results. Even when I got it to work well I didn’t like whipping back and forth and the constant trading. I’d rather wait for 1-2 good set ups and trade a few times a day. I’ll take anywhere between 15- 50 pips a trade, depending on where my set up is.

Trying to scalp for just a few pips drove me nuts. I suppose if my account was so large I could trade a couple hundred dollars a pip value I could scalp once or twice a day and like it.

6

Absolutely agree with you there!

The thing that freaks me out about scalping is, what if the SR level you think your trading off of turns out to be a trend?

I don’t care much for hard stops unless I have to use them, I’ve seen price go exactly to my stop and turn too many times… Though, today was a supreme scalp setup for the EU.

Price bounced back and forth by 101 pips through a near perfect channel. I was just getting up the nerve to go short when it got to the top, on the next wave…

It never got there, it plummeted at the 50% mark so I took it for a ride on the way down.