The World’s Best Indicator

Did you know there is an indicator out there that will help improve your trading? One that will help you gain more profit and lessen your losses. One that will give you consistent results and help you “pull the trigger” when it’s time to take the trade. One that can turn you into a money making machine. Yes, it’s true, yet most people don’t know about it. What is it? Read on.

If you’re like most traders your charts look something like this:

And my first question is always “how can you make a decision with all that on your chart?” Of course the answer is you can’t. There is too much information on the chart, much of it conflicting, making it nearly impossible to make any decision at all.

Why am I telling you this? Wasn’t I supposed to tell you which indicator does work? Okay, here it is: the World’s Best Indicator is the one that helps you make a decision. Feel cheated? Don’t. There’s more to this than you realize.

You see all indicators work, to a degree, but we traders convince ourselves that there is a “magic bullet” out there that will solve all our trading problems, so we spend countless hours mish-mashing indicators together until our charts become so cluttered we can’t make a decision anymore. We think we’re being smart, but in actual fact this is death to a trader.

Without exception, ALL successful traders are able to make clear BUY/SELL decisions, whether right or wrong. Professional Traders and Money Managers know that even if they are right 50% of the time they can still make money trading. A lot of money. How is that possible? Because Professional Traders know that proper money management is more important to their success than finding the “magic bullet” signal.

Professionals know that the market is unpredictable, so trying to find the perfect signal is a waste of time. They know that what they need is a clear signal they can act on. This combined with “never-ever-ever risk more than you can afford to lose” money management are the keys Professionals use to become successful traders. Yet this is the exact opposite of what most people do.

Most people think that in order to be successful traders they need to be right all the time. They hate taking a losing trade; hence they spend all their time “tweaking” their entry signal by piling on one indicator after the next, giving little or no thought to how much they are going to risk on their trade or how they’re going to manage the trade once they are in it. The end result is a chart so cluttered that you can barely discern the price bars, never mind trying to make a decision. With so much information you end up with “analysis paralysis”.

So if you’re unable to make a clear BUY/SELL decision off your chart, and if you continue to risk too much of your trading account, you are doomed to become another trading statistic. Do yourself a favour and start stripping off some of those indicators that are cluttering your charts. Your mantra should be “does this help me make a decision?” If it does, it can stay. If it doesn’t, get rid of it. The key is not which indicator but does it help you? That’s how the Pros do it and so should you.

For more from Erich, visit the Indicator Warehouse for additional futures resources and NinjaTrader Indicators.