Trading Indicators: the only way to use them
Trading Indicators are overrated. People put too much weight on them. Yes, they are crucial in trading, but indicators alone won’t give you consistent profits. In this guide, we will enlighten you with the proper way to use them so you can make as much money as possible while trading.
Because, honestly, a lot of people are making huge mistakes and getting burned just by overestimating an indicator’s reliability.
Our master trader, Craig Cobb, has seen this happen in both traditional and crypto markets. It’s always been the same.
The reason for this is that people are seeking buy and sell signals. And that’s understandable, right? Knowing when to buy and when to sell is how you make money in trading.
But the problem is, an indicator is only one ingredient for the recipe of success. You can’t win in trading with just one ingredient the same way salt or pepper alone can’t give you a satisfying meal.
You need the whole recipe. And in trading, you have to execute them flawlessly too if you want consistent results.
What are Trading Indicators
There are many broad and complex definitions of indicators across the internet. But here at Trader Cobb, we like to keep things simple so you can learn quick and efficiently.
As the name states, a trading indicator is simply an indication of what MAY happen with the price. Most indicators are lagging.
An indicator does not predict price. It looks at past trends and indicates momentum.
How NOT to use trading indicators
Craig always stresses the fact that he doesn’t use indicators to determine when to get in a trade. Never.
They don’t determine when to get out of a trade either.
He also doesn’t use too many indicators at once. More indicators does not mean higher probability in winning trades.
So how do we use them?
How to use trading indicators
Indicators determine the momentum of price, which make them an integral part of trading strategies. That’s why it’s very important to understand when to use them.
In the TraderCobb strategy, an indicator can only suggest when you should NOT take a trade. It is part of a multi-layered approach, not a standalone technique.
We use a checklist-based trading strategy, that is to say, all the ingredients have to come together otherwise we skip the trade.
And this is where the indicator becomes really valuable. If it isn’t positioned in just the right way, then that is an indication that you shouldn’t take that trade. For that reason, indicators are your helper.
They save you from bad trades. That way, your risks are substantially mitigated and all trades you take will have high probabilities of winning.
What trading indicators should you use
There are far too many indicators available that new traders are left confused on which ones to use. Tradingview alone has over a hundred built-in indicators.
Craig saves you time by only teaching you the two common indicators that he uses:
Exponential Moving Averages
Craig uses two EMAs (10 and 20) to create the so-called cradle zone, which is a vital area in a chart, used for determining entry and exit points. When a candle is between those moving averages, it’s usually a good sign.
Moving Average Convergence Divergence (MACD)
Craig uses the MACD to determine if the trend is convergent, divergent or flat. When it’s convergent, that’s one check mark in his list but not necessarily a buy signal.
As you can see, none of the two indicators are used solely in Craig’s cryptocurrency trading strategy. They are two out of about 16 checkboxes in the Trader Cobb strategies. Craig never uses them on their own.
Indicators, when used properly, will help you avoid losing trades and manage your risks. They are a single part of a multi-layered trading strategy.
And if you follow Craig’s checklist-based strategy, you will understand why you don’t need to waste your time on most indicators.
The checklist-based strategy is the simplest and most easy-to-digest strategy you can ever learn in trading cryptocurrencies. No fancy names. No dodgy tactics.
The courses are straight to the point and will absolutely help you become the best trader you can be. Our students can testify to that.
Categorised in: ArticleTags: indicators, trading strategy