Perhaps simpler is better....

There is an age old saying that I have heard many times throughout my life so far , especially when it comes to business, and it goes something like this .. " Keep it simple stupid! This saying has been told to me many times in my life so far. I have heard it , read it and even witnessed it on television a few times. This saying K.I.S.S. I believe has some relevance in many areas and trading is one of them.

How many times have you looked up and trading system , indicator or methodology that you were curious on about the markets only to see t a video on you tube where the host has a chart that looks like it could be a schematic for a nuclear bomb or a very sophisticated house? Often times when I watch these videos I cannot help but see the vast array of indicators and lines on their charts. We have many different ones to choose from so people must think that since there are so many they must work right? Should you have stochastics, Fibonacci retracements, moving averages , Bollinger bands , ADX , MACD , Andrews pitchfork and trendiness all on your chart at the same time? My opinion is no. While I believe confluence is important in trading I think to many indicators on a chart can actually make things a lot more confusing.

Many of us are looking for that "Holy Grail" indicator that will tell us exactly when to get in and when to get out. Sadly , at least in my experience, there is no such thing. There are probably many things to get close to perfection but there really is no secret unless you own a flux capacitor and have access to a Dolorean.

I have also seen many studies and theories that rely on simple systems that produce equally if not more impressive results than a system with a ton of indicators.  For example I have seen a simple moving average system produce quite impressive results using just one moving average plotted on a candlestick chart.

My point here is that sometimes less is more when it comes to trading, yes confluence is great to have but when you are waiting for all the traffic lights of the market to turn green at the same time , you are going to be stuck in the driveway forever.


Pipmesiter.