Which is important - Traders skills vs Indicators/Tools or Both?

Trading Discussion
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Hi Babypips community

I asked the Gemini 2.0 Flash the following question related to the thread topic

Hi can you write a summary comparing either the trader or the strategy/indicators that are important in trading providing different terminologies used by TA, PA, or ICT/SMC traders in a table format

For Example

A formula race driver using racing cars can not only drive high-speed vehicles but can also use normal cars effectively and much better than an average driver. Whereas, the normal driver can not drive a vehicle used in Formula race better than the Formula Race driver

I append below the Gemini’s reply for your review:

Okay, let’s break down the trader vs. strategy/indicators debate and then organize the terminology.

Summary: Trader Skill vs. Strategy/Indicators

The core question is: What matters more in trading success – the trader’s skill or the strategy/indicators they use? It’s not an either/or situation, but a blend, with the trader’s skill often being the dominant factor.

  • Strategy/Indicators (The Tools): Strategies and indicators are like the blueprints and tools of a trade. They provide structure, rules, and signals for potential entries and exits. They can be based on price action, technical analysis, or more complex mathematical models. However, they are not foolproof. They are often static and don’t adapt to changing market dynamics.

  • Trader Skill (The Craftsman): The trader’s skill encompasses a wide range of abilities: understanding market context, interpreting price action, managing risk, having emotional discipline, adapting to changing conditions, and knowing when to trust or not trust a strategy/indicator signal. A skilled trader can succeed even with a simpler strategy because they understand why it works and when to apply it. A less skilled trader might struggle even with a sophisticated strategy, misinterpreting signals or failing to manage risk.

The Racing Analogy:
As you mentioned, a skilled F1 driver can easily drive a regular car better than a normal driver. They have the fundamental skills (timing, control, reading the road) that translate across cars. However, an average driver can not just enter an F1 car and drive effectively. A good driver can adapt to any car, but a good car can not adapt to any driver. Similarly, a great trader can adapt and trade profitably under different strategies, whereas a great strategy may not guarantee profits if a trader can not execute it correctly.

Therefore: While having a sound strategy and a useful indicator is necessary, it’s the trader’s ability to execute that strategy consistently, manage risk, adapt, and understand the underlying market dynamics that ultimately determines success.

Terminology Table:

Here’s a table comparing terms used by different types of traders, focusing on how they approach the idea of trading tools versus trader skill:

Term Technical Analysis (TA) Price Action ¶ ICT/Smart Money Concepts (SMC) Emphasis
Core Belief Patterns and indicators repeat and predict future price movement. Price is the ultimate indicator; analyze based on its flow. Institutional order flow drives market movement, not random patterns. Trader skill, emotional control, and Risk management are the prime factors.
Key Tools Chart patterns, support/resistance, Moving averages, RSI, MACD, Fibonacci, etc. Candlestick analysis, supply and demand zones, trendlines, price structures. Order blocks, liquidity pools, fair value gaps, Breaker block, mitigation. Trader’s understanding of context and application of concepts is emphasized.
Entry Signals Indicator crossovers, pattern breakouts. Pin bars, engulfing patterns, rejections from zones. Taps into order blocks, liquidity sweeps, refined price action within the areas of interest. Skill in identifying high-probability setups and execute in a disciplined manner.
Strategy Follow the rules of your defined indicator strategy (eg. MA cross-over) Discretionary based on PA analysis in particular areas. Combine SMC to define areas of interest, then use PA-based execution. Strategy is a guideline; it’s the trader’s application that matters.
Stop Loss Often based on % of account balance or certain pip value. Placed beyond identified structural points or below/above supply/demand zones. Placed just outside the defined range or order block. Trader’s control over risk management is key.
Take Profit Fixed ratio targets or previous swing highs/lows. Based on previous high/lows or target zones. Based on liquidity pools or previous swing highs/lows. Trader’s awareness of key market structures to set targets.
Market Context Look for confluence in indicators to validate the price movement. Understand the underlying trend and where the market might be going. Identify and trade within range of where the big market movers want to move. Trader’s understanding of overall market flow is essential.
Trader’s Role Rules-based trading, use indicators to minimize subjectivity. Discretionary trading where your interpretation of PA leads to decisions. Be adaptable, patient, and disciplined. Execute trades according to defined areas of interest, using PA as confirmation. Trader as a skilled interpreter and executor, not just a system follower.

Key Takeaways from the Table:

  • TA: Tends to be more rules-based, emphasizing the predictive nature of patterns and indicators. Trader skill is in finding effective indicator combos.

  • PA: Is more discretionary and focused on direct price observation. Trader skill is in reading the market’s story.

  • ICT/SMC: Focuses on understanding institutional order flow and structures. Trader skill is in identifying these zones and executing trades.

Conclusion
No single trading tool guarantees success, but traders who are skilled at analysis, risk management, and emotional control have the flexibility to use any method effectively. So instead of obsessing with the tool, focus on your skills and your ability to adapt.

I have also attached a screenshot of the EURUSD 15M TF chart depicting the various terminologies used by TA, PA, or ICT/SMC traders. From the chart, you can observe though the concepts are the same, the terminologies are differently used by them.

termenology
termenology1833Ă—761 119 KB

What is your opinion on the above response of Gemini 2.0 Flash?

Update:
I request the forum members to focus on the thread’s content with the topic’s heading.

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This is a fascinating example of what AI can do and it pretty well sets out the logical foundations of the differing approaches. Interesting to read.

But the more honest version of the response you received would have been, “I don’t know”.

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:+1:

I’d say “Superficially impressive only to people with almost no experience or skills at all, but actually of very-little-to-no real value.”

And unfortunately, of course, reads a little like yet another advertisement for ICT, which is pretty concerning - but that was inevitable, given the loaded wording of your original question.

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Some of his followers regard ICT as a trading god, and a unique anti-corporation rogue truth-teller. In fact, what I’ve seen of his trading is rational but not obviously unique, and it’s hard to follow, while he has admitted to making more money from wannabe traders than he makes from trading himself. What is definitely true is that just the mention of ICT on a forum is click-bait for a lot of people.

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@Hiromi_Ishii

First of all, I am not promoting or advertising ICT or any specific strategy.

You misunderstood my point of view altogether. I was just pointing out that various traders use different trading strategies/tools, but their concepts of trading are the same while they use the terminologies differently.

As I highlighted all of them in the EURUSD chart, perhaps you didn’t view it.

I don’t regard ICT as a trading god.

I have only provided a comparison of the trading strategies or systems and it wasn’t my intention from the forum members.

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It was an interesting exercise in application of AI to trading and well worthwhile. Makes total sense to use widely differing approaches as the examples for AI to compare - giving it something to chew on.

Looking forward to more about trading and AI in the future. We just at the moment do not know where this is going to lead.

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He’s also previously admitted to spamming trading forums with multiple identities.

I viewed it carefully and disliked the way that all 6 text-boxes referred specifically to ICT, but as I explained just above, that was perhaps inevitable, given the loaded wording of your original question.

If that’s a polite way of saying that ICT has persistently plagiarized other people’s work in such a way that he can try implicitly to take credit for it himself, then certainly huge numbers of experienced traders would agree.

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Perhaps not in the future, because when I was an active member during the year 2017-2020, At that time, I received so much criticism on a few of my threads from the forum members without knowing the logic behind the content.

So, I will not post any new threads on the Babypips forum in the future.

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Update:
I request the forum members to focus on the thread’s content in relation to the topic’s heading.

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Both matter, but a trader’s skill is key—tools and indicators are only as good as the person using them.

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There’s likely to be a change in each trader’s benefits from either their skills or their TA resources as their career advances.

After all, what skills does a trader have 1 day into their trading career? Almost nil. After 1 year? - more. After 10 years? - a hell of a lot - if they’re consistently profitable.

So for a new trader, strategy is the key. If they don’t have a strategy, they won’t make it to the 1 year mark.

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It is completely irrelevant with the contents of my thread.

I have clearly provided example of a F1 Driver vs an Average Driver. I never mentioned the word “Novice or Learner driver”.

F1 driver = Experienced Trader
Average driver = Average Trader

I have also clearly mentioned this in my thread:

But it looks that @Hiromi_Ishii has missed to read it before. That’s why I have to rewrite it again in replying to her post.

My thread wasn’t related to ICT strategy only. Surprisingly, the lady aggressively talked about it.

Sometimes , people don’t bother to read the entire article or thread and instantly jump in to comment on the content, which mostly bother them.

However, thanks to participate my thread.

Sufshiken

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Nevertheless, my observation with regards newly-starting traders is correct and it’s an observation which I make to the wider BP community for their benefit. But the opportunity arose through your posting of this thread in the first place, which is something I appreciate.

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Thank you for visiting this topic and what a great way to use AI.

I think it is an overlooked subject for new traders that are constantly chasing the new shiny object strategy instead of improving themselves overall as a trader.

I brought up a similar conclusion, minus the granular and tabular data format, in this thread: The Trader or The Strategy - Which Is More Important?

I’m going to update my topic with a link back to your topic since they are so related.

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Hi @Sufshiken,

Thanks for starting this great topic. I don’t want to get involve with ICT, SMC, PA or anything. They have their own army, so let them defend their ideology. :sweat_smile:

I believe trader skill is the reason trader can survive for long time. Once we know more about trading, we don’t need any terminology. We need something generic.

When we are a doctor, when we have pain, you won’t call I need panadol or any other brand. You will say, I need paracetamol or ibuprofen, or more generic thing analgesic.

Well experienced traders wont limit themselves by using well defined strategy. Because a well defined strategy has flaws.

Strategy is used for guidance only, let us spot entry point easier. Without trading skill, one will get into the battlefield right away, blindly, foolishly. By having a good skill, we will analyze the situation, up down, left right, front and back, before risking our money.

Finally, I just want to emphasize, the most important thing is our mindset. We have be able to manage our thoughts while trading. Good traders must have a very well structured way of thinking. It’s not random. When it’s practiced every day, it becomes habit. This is the point when a trader can enjoy their skill.

Detail to your analogy F1 driver. I have a friend who is a professional racer. In my eyes, they are just a bunch of crazy guys who willing to die for speed. He is a is also a trader. During high speed, when he has to turn, he told how he did, step by step, started from accelerate the car, brake, gas, brake, after the car is starting to swing (imbalance), he will use the momentum to turn. Crazy to know how he coordinates his hand, leg, hand, waist :sweat_smile:. Since he has gotten used to it, when he wants to turn, it becomes his reflexes.

The same to us, traders, we need to have proper trading mindset, practice it until it becomes our routine and reflexes. A trader who limit themselves to a strategy, will surely be perish soon or later. In the end we only need SnR and PA. Price Action is not a strategy, but philosophy. Just like you learn math, what ever you call it, Algebra, Geometric, Arithmetic, Calculus, Statistic, the principles are addition, subtraction, multiplication and division.

About AI, since I was graduated from computer science, Neural Network has been one my research. AI is not smart, but very good to make conclusion from a knowledge pool. As a human, we have ego and limited memory. Computer is better in these area. How AI work is by collecting information inside the pool to generate most popular answer. We are human in the pool, so AI will summarize to create the best result from it.

As example, inside the pool there are 100 people. 70% of them thing human is a plant. Then AI will give answer, human is a plant, since the opinion is the popular one, it becomes the truth. AI can’t make decision without good foundation. Human, us, is the foundation. When we rely more with AI, that will degrade human skill, culture, etc slowly over the time.

My concern by using AI for trading advice. As we know AI need information pool. The pool is us. We know 90% traders fails. So I don’t think AI will give good advice from 90% traders who are on losing side. :sweat_smile: If you ask how to use indicator, how ICT, PA, SMC works, AI will produce the most popular answer, but it’s not always the correct one. :slight_smile:

There is one big thing to be concerned by my professor about AI. We are human survive until now rely on the ability to think. By thinking we exercise our creativity. Creativity isn’t produced everyday, but it’s merely statistical number. For example from 100 person, when there is only 1% creativity produced, we will have 1 breakthrough.

When everybody use AI, we can no longer have 1% creativity rate. That will no more breakthrough. Everyone becomes lazy, just let the machine works. That will be the beginning of an end. :face_with_open_eyes_and_hand_over_mouth:

( I have been correcting my post over and over. This is the example of AI, Auto Text, pretending so smart. I want to write “now”, it keeps replacing it with “know”. :roll_eyes: )

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hi @Sufshiken, this is an interesting topic. In regards to your question

i believe its the traders skills rather than strategy there is no dependency from success from choosing your strategy. Like you have mentioned TA,PA,ICT/SMC are all possible strategies a trader can select from. I believe we all can analyze the exact same zone/POI/area however, depending on your strategy that may mean a different concept from PA to ICT/SMC, like you have drawn in your chart.

the real skills of a trader are Money management / risk management, psychology and consistency, which take years and years to develop.

i don’t really understand why people do get so defensive about there strategy when the strategies themselves are all intertwined and similar in way, what separates you from traders is your mentality.

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Agreed! What trading strategy do you use?

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Thanks to all forum members for participating in my thread and providing insight and feedback.

Sufshiken

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I think traders’ skills are way more important than anything else. I also think the top skill is knowing whether or not you have a real edge over the market. Without that, nothing much else matters, and it isn’t an easy thing to learn how to tell, either.

Tools aren’t really going to help anyone who doesn’t know how to use them properly? So that also requires skills, first and foremost?

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Resources
Resources625Ă—577 64 KB

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