There are a lot of studies that have shown how successful forex traders behave and think differently than those who are on the losing side. Since mindset and execution are different, today we will focus on one particular aspect- the use of technical indicators. We’ll see how each side is treating indicators and why results are totally different. Hope you will manage to learn some lessons and incorporate them into your trading regime.
How to approach indicators?
We have to acknowledge that technical analysis is very important in forex, but there are still some particularities that make a difference between those who make money and those who don’t.
Most of the time, beginners are using indicators in order to cover a lack of confidence they have in anticipating market movements. From an emotional point of view, they are unable to deal with uncertainty and that is why they pop up a few price indicators that will confirm at a point in time their view on the market.
Beginners had not developed the necessary skills for understanding the market and anticipating future moves and combined with the fear of losing this leads to an improper use of technical indicators.
Professionals on the spotlight
Naked chart trading is very popular among professional traders. That happens because they have a lot of experience in the market, they have seen many situations, they have also developed pattern recognition skills and they do not need a lot of indicators on their chart to confirm when a trading opportunity occurs.
They are able to understand what happens behind the chart they are seeing on their broker’s platform and thus technical indicators become just a tool that improves their performance. You won’t find any professional using 10 technical indicators, watching them all to see if they all point out towards the same thing, so he will have the confidence to trade the market on a certain direction.
What any beginner needs to understand is that price action trading should be at the core of any trading strategy and technical indicators are just additional tools that improve the overall performance.
To summarize, make sure that your charts are not too crowded with a lot of indicators and instead focus on maximum 2-3 of them that you are mastering better. Keep things simple because trading is already complicated enough. This could really help you out in your activity.