5 quick reasons why I trade with technical indicators

5 quick reasons why I trade with technical indicators

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If you've been trading for any amount of time, you know there are hundreds of indicators available on every trading platform.

I've spent years experimenting with every indicator trying to find the "holy grail" combination to use in my trading system, and I've come to realize there is no such thing.

The reality is, price action is more important than any indicator, but that isn't to say indicators don't have a place.

Below is a list of 5 reasons why I continue to use technical indicators in my strategy.

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I'm visual

I use the relative strength index (RSI) to look for potential oversold and overbought price action.

It makes it visually easier for me to spot the set-ups I'm looking for. For others, it could be Bollinger bands, MACD or moving averages. They each compute previous price action differently and also have a unique look.

Confluence

Price action is king, correct. But it's nice to have a second or third opinion to give you more confidence that you are making the right decisions. Confluence is when an indicator provides a buy/sell signal at a high probability support/resistance zone.

Divergence

When an indicator like the RSI moves in the opposite direction of price, it may mean the trend may be reversing soon. You won't know the exact time, but it's a signal none the less.

Alerts

I don't want to be scanning the market all day, so I use moving average crossover and RSI alerts to let me know what's happening in the market. For example, I will receive alerts when the coins I watch become oversold or drop below 30 on the RSI. This free me up to do things other than staring at the screen.

Self-fulfilling prophecy

People trade different timeframes, different indicators and use different strategies, which is why this one is a bit controversial.

Still, there is some merit to it, especially on higher timeframes such as the daily and weekly. Moving averages, Fibonacci zones and RSI are very popular indicators, so it would make sense that many people would be receiving the same signals and possibly entering/exiting at similar zones.


Hey, I'm Joeal. I'm a full-time trader and life-long learner. I write articles sharing my insights and commentary on the exciting world of cryptocurrency.

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