Market Speculator FAQ: What Indicators Do You Use?

Swing Trading Pattern Recognition

Beginning stock traders love indicators. They feel that the "secret sauce" is hidden in some combination of indicators and timing. For this reason, "What indicators do you use" is not only a common FAQ, it's the second most frequent (after "how much money can I make trading").

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Many are disappointed when I tell them I only look at moving averages and stochastics, while sometimes peaking at RSI to spot divergences. Last week I even had an e-mailer tell me I was hiding my strategy from them!

Here is the reason I use so few indicators, and even those are usually unnecessary.  Almost all indicators are measuring two things in some for or another: price action and volume.That's it!

Guess what? Your eyes can spot price action and volume. An advanced trader doesn't need the indicator. After studying thousands of charts on a daily basis for over a decade, the advanced trader doesn't need indicators. The eyes tell it all through pattern recognition.

So study charts. Religiously. On a daily basis. Thousand of them, over and over again. Pretty soon you'll spot patterns in seconds without needing confirmation from an indicator.