The Importance of Technical Indicators

I see a lot of Technical Junkies who’ve got shitloads of Technical Indicators, stacked on top of one another, trying to gain an edge over other market players, only to get their asses handed over to them on a Silver Platter. Welcome To The Real World. The truth is, all Technical Indicators, MACD, Stochastic, RSI, Money Flow, etc… are lagging indicators. Which means that their signals are delayed, and as such, cannot be relied upon. They basically show the past price action, and don’t help much in determining how a Stock will trade in the future. It doesn’t mean that they are not useful, it’s just that they cannot be relied upon for making Trading Decisions. What Technical Indicators are useful for, and I personally think that they’re of no other use than this, is to gauge the market sentiment and see whether a Stock is Overbought or Oversold. That’s it. Also, just because an indicator says that a stock is Oversold, doesn’t mean that you need to go in there, and start Buying The Fu*king Dips. Stocks can stay Overbought and Oversold for long durations of time, thus rendering any Trading Decisions based on Technical Indicators, USELESS.

My Advice:

Don’t get too addicted to/obsessed with Technical Indicators. Just focus on your Old School Technical Analysis .i.e. Support/Resistance, Moving Averages, Chart Patterns, Candlesticks, etc… and only use Technical Indicators to confirm your analysis.

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