From the moment i started learning about Trading Strategies and Trading Systems i kept seeing this little phrase all over the internet:
** SIMPLICITY IS THE KEY **
which means that we gotta keep our strategies as simple as possible , right?
a few examples: #1 when price hits price action support & resistance and if it is in overbought & oversold of RSI and we have clear buy & sell signals from Stochastic Oscillator , then we open our position. #2 if we are bullish on Ichimoku cloud then we try to find a buy position when price is retracing and hitting a price action support , and exactly the opposite for bearish momentum.
I don’t understand , is that what professionals and experienced traders do?
or they do a comprehensive analysis on their charts every day?
what is wrong with being thorough? i get it , as they say (you don’t want to get lost in the chart), but here’s my final question DO WE NEED SIMPLE STRATEGIES EVEN WHEN WE ARE EXPERIENCED?
do we just have to keep everything simple because it’s how you survive in the markets…
I think the more experienced you are the more simplistic your trading strategy will become.
At the end of the day you will never be able to guarantee which way the market moves regardless of how complicated your strategy is.
Eventually, those that stick it out will find a simple way to identify an edge in the market then continue to exploit it - keeping things boring… and simple.
I think the complexity and over analyzing comes from those that are still learning and searching for the holy grail - at least in my experience this is what I have seen.
You know @Shrezinc, trading decisions can be even simpler and perhaps more effective if you disregard signals from technical indicators. Indicators do not give reliable entry signals. You might think of them as a barometer - very good at telling you if atmospheric pressure is rising or falling but that will not tell you whether you will need an overcoat today or your sun screen.
I think when you first start, you don’t know which way is up. For me, I was excited to be a very technical trader and use crazy indicators and do a lot of math.
But, I’ve heard from experienced traders that simpler is better. Don’t soup it up; just keep it meat and potatoes.
I think the more complicated the strategy, the more false signals you could possibly expose yourself to.
Most people fail because they don’t know what they are doing. As Warren Buffett said, Risk comes from not knowing what you are doing. Most small traders here are doing nothing but scalping.
I don’t think you need to get too hung up on this issue. I think a better way of phrasing it would be to “Keep it sensible”.
This concept arose because of the natural tendency of Newcomers to overdo the number of indicators. Whenever a loss occurs (as it always does) it is a natural reaction to look for another indicator to “plug the leak”, and then another and then another and so on. Eventually, one arrives at the state of “Analysis paralysis” where separate indicators are saying different things: Go for it! No, wait a bit!
The answer lies not in the number of indicators and lines, but in recognising that trading with probabilities merans losses as well as gains and that risk/money management is the way to ensure the gains outweigh the losses.
So keeping it simple really only means establishing what tools you really need to tell you what you need to know in order to make your decisions. Anything else is superfluous, even confusing and maybe even counterproductive.
So the consistent traders will keep their charts minimalised down to the essential and clear of the clutter. The rest of the success formula is off-chart in the management issues and in the trader’s mental state of mind.
Ive been debating this with myself since i started learning forex, there are utterly simple strategies that can give consistent results. But what seems complex at first, starts to become simple with experience, which is the same for every skill/job etc. After x amount of chart time, the most seemingly complex amount of analysis will appear simple to you, but complex to lesser experienced traders. So basically you may start with a simple strategy, but then naturally progress to more complex methods to either improve you winrate and/or increase your R rate.
Sorry if any of this doesnt make sense as I am quite p*ssed as its NYE so Happy New Year to all of you
it’s because you have the experience that you want to keep it simple for obvious reasons, to be more efficient, to be more profitable, and to not make unnecessary mistakes like using too many indicators, reading too many news etc.
Well, I believe that it is your experience that makes trading simpler for you over time. The more time you have spent in the market, the easier it will be for you to trade forex. But still, it won’t ever be possible for you to guarantee how the market will behave the next second.
Hey Shrezinc. You know I have been facing this dilemma for quite a while and finally reached a conclusion that being thorough and keeping a tab on the market trends is what will make us better at the trade. Thanks to the unpredictable nature, one can hardly expect to survive in the market regardless of whether you’re experienced or a beginner. Now I also believe that too much of an in-depth analysis does mar the trading instincts.
I’d say, keep revising the charts, follow the trends and ultimately with experience, the strategies will fall in place making things less complicated than what they were in the beginning
