Futures Trading Emini, But Can't See The Forrest Through The Trees?
So often traders feel that they have to put many technical indicators on their charts, cluttering the charts to the point that they can no longer see the price trend. For whatever reason, these traders feel more is better. Without price trend, it is difficult at best to be a successful trader.
Here's the real problem with using multiple alerts on technical analysis charts....these alerts conflict. One alert will tell you to buy and the other sell. Once clearly shows price going up, while the other shows it going down. At that point, there isn't enough data to trade with. Which one do you follow? Which one is more accurate? It's the old, who's on first game.
More technical widgets is not the answer. If you surf the internet, you will see dozens and dozens of widgets to trade with. They sell this computer gizmo, and that computer gizmo, all designed to alert the investor when to buy and sell. But what do we know...all these gizmo's are based upon the same 3 things: price, volume and time. Some alerts round up, some round down, and others, well, they don't round at all. Some call themselves "non-laggy" while others say they are clearly laggy. Which one do you need?
The answer is simple...less is more. The Market itself selects a very small sampling of trending indicators, nothing more nothing less. It is always safe to stay with what the Market uses. If John Doe is selling some "non-lagging" computer generated indicator, the Market doesn't know anything about John Doe or his widget and won't be interested in what he has to say. Bottom line, don't waste your money.
Here's another important concern. Computers, while helpful, are not good at identifying price action by themselves. So many things happen during the course of a day, small nuances that change the way the Market trades. News items come out, high frequency trading robots (HFT) enter their own trades and change direction, etc. These things the computer signals cannot identify or help you with. So if you are waiting for a computer generated alert, and an HFT changes your direction, you're almost guaranteed to be stopped out.
Instead of relying on computer signals, learn to trade the charts. Use simple indicators to help you, just a few. And never rely on computer automation to decide for your trading portfolio. You are the trader, you make the decisions.
Questions and Answers
Paper trade your trading strategy. Do not trade with real money before you have fully tested your plan and contingencies. Brokerages offer E-Mini market simulators that you can use to develop your trading system. Invest the time to gain confidence trading before you trade for real.
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