There are hundreds of technical indicators available for free and for sale. Everyone seems to claim to be successful using typical indicators like MACD and Stochastics with standard settings. Tons of people on twitter show their breakout charts or trend line breaks and act as though they are making a killing using standard discretionary trading methods. The fact of the matter is classic technical indicators no longer work.
Learning Modern Technical Analysis Is Imperative…
99% of books written on trading will tell you to follow the 50 and 200 simple moving averages. While stocks do gravitate to these prices, there’s so much market noise around them that you can no longer use them for generating any sort of signals. “The herd” is defined as the majority of the people on one side of the market (long or short a security). Since 95% of people are wrong at timing the market it is logical to realize that the herd is almost always wrong.
Don’t Trust The Gurus On Youtube…
The herd is the people that buy a basic technical analysis book online and think they are going to become a millionaire from using moving average crossovers. Trading guru’s try to con people into buying there “holy grail” systems that use these basic strategies. 25 years ago you could make a lot of money buying when the stochastic oscillator gave an oversold reading below 30 and selling when it got to an overbought reading of 80. Today this indicator with standard settings is straight-up useless and will cause you to lose your shirt if you believe it still works like it used to.
HFTs Rule THe Markets Today…
High-frequency trading and electronic market-making have put an end to the days of easy money. You have to learn or develop a trading system that is unique and has a statistical edge. This type of information is not readily available. I have devised my own trading system after spending thousands of dollars on worthless trading systems that I purchased from guru’s and useless trading alert services.
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