Lots of people, especially the ones new to Technical Analysis or trading are often confronted with this question – Which is the best indicator, charting software, moving average etc? The idea behind this post is to clarify that these questions are meaningless and as Ian Chappel once said during his pre-match commentary, “The best score for the team batting first would be one run more than their opposition”
Similarly, any indicator or software or moving average that helps you make money consistently is good enough. Any tool, irrespective of its construct, that helps you in identifying buying opportunities in an uptrend or selling opportunities in a downtrend, is good enough.
Traders must realise that any indicator, moving average or oscillator is just a crutch, Period. By design, they are moslty lagging in nature.
Just ponder over this – In an uptrend, all buy signals from any oscillator or indicator or moving verage would be profitable and vice-versa.
As long as you know how to control risk and if you are aware of what “Equivalent Risk” is and if you have a logical target with a risk-reward of 1:3 or better, then any indicator is good enough to make money.
Better still, you don’t even need any indicator if you know how to identify where “big” buyers / sellers are stacked up. Once you can identify that neighborhood, then it is question of shorting near the zone of sellers are getting long ahead of the zone of buyers.
How on earth does one identify where these “big” buyers/sellers a.k.a operators or simply the ones with pockets deep enough to influence price. This a question we would address in subsequent posts.
Until then, trade safe.