DoYou Need Indicators To Trade?
When trading on Bitcoin code you see many technical analysts having a host of technical indicators on their page. This makes the charts look complicated and a novice is left wondering what these indicators are all about.
The technical indicators are tools that are used by traders to confirm the trades. These show whether the price is overbought or oversold or whether there is a divergence on the indicator and the stock price to take a trade.
There are a number of indicators that are used by technical traders. These include stochastic, ADX, moving average, Bollinger bands etc. However what needs to be understood is that the indicators are lagging in nature. This means that they will generate a signal only after the price has done what it has to do. So in case, you plan to take trades only on the basis of indicators then this could lead to wrong trades or you enter the trade with a delay.
How should you take trades?
The technical indicators are used to take a trade but these should be used along with the support and resistance levels. This means that you should not just use the technical indicators to take a trade but to use them along with the technical levels. The technical levels should be the sole deciding factor. You can use the indicators to confirm the trades.
Why technical indicators should not be used independently to take trades
The major reason for this is that the technical indicators are lagging indicators. Also, the problem with technical indicators is that they tend to give mixed decisions. So it could happen that one indicator is giving you a buy signal and the other is giving you a sell signal. This will make you take a wrong trade and you will end up losing money on the trade.
Also one needs to be well versed to understand what the technical indicator is trying to tell. You should be very clear on how to use the technical indicators. What may work for you may not work for someone else. You may be comfortable using a particular group of indicators while your friend may be using another group of indicators. Thus it takes time to master this art and even then you cannot be sure that your trades will be a sure shot profit.
So next time you trade, trade with demand and supply levels. Use the technical indicators only to confirm the trade.