What’s The Best Chart Indicator For Trading?

2020-05-27 | Simpler Trading Team

There are many choices when traders are searching for the “best” chart indicator to accomplish their trading goals.

Choosing can seem overwhelming. If we use only one indicator, it seems not enough, and if we use 100 indicators, it’s a tidal wave of confusion.

It’s important to keep in mind that there is no “magic” indicator. If that were so, the market would adjust and render the indicator worthless.

At Simpler Trading we encourage traders to focus on the key elements for each indicator, and then use those that fit your trading style and plan.

The best indicators — and Simpler has the best — work to interpret the most important variable on a chart, the price. We want to identify price direction in the market and execute a trade setup.

Markets move in only three directions — up, down, and sideways. Traders learn to adapt to the underlying trend of the market and to understand the price psychology that powers those trends.

At the end of the day what makes a market is millions of participants mostly seeing the same information and acting in their own self-interest. This creates price movement.

The market is a volatile sea of emotion and noise. Indicators act as beacons to find calm in the storm by staying consistent in our interpretation of what we see.

The actual security (stocks, futures, options, Forex) is irrelevant. The goal is to trade the psychology of price levels —  not the news or the noise. Indicators allow traders to define a systematic approach and then build on that foundation to develop a personalized trading strategy.

We Saw: Dow rocket above 25,000 — 

  • Dow regains lofty level not seen since early March
  • All three indexes pushed above Tuesday highs
  • Economic devastation revealed across US

We’re Watching: … Internal indicators to support surge —

  • High-flying “pandemic” stocks faltering
  • Record retail speculative activity
  • Price plays for profit as markets spike

Want a shortcut to master a certain strategy or indicator? Discover more with Simpler Foundation.