Last updated on April 4th, 2020
The number of trading indicators available to any trader that they can slap onto their price charts is vast.
Whether we are talking about trend indicators such as moving averages or overbought/oversold trading indicators like Stochastic Oscillator, trading indicators help us in making sense of the markets we trade.
|| “There are 8 planets in the sky. Hope you’re not using that many indicators”
You may be one of those traders who use indicators but really don’t know much about them…like other traders like you.
How can we make that a definite statement?
Most traders lose.
That’s not a secret, is it?
I think you can put a combination of indicators together and along with strict rules and a trade plan, winning is not as elusive.
We see it every day here at Netpicks.
The Most Important Indicator
Believe it or not, there is one indicator that will increase the likelihood of you finding success in trading.
This indicator will work with any market, time frame, any sized trading account or style of trading. This indicator has nothing in common with all the ones you will find in your charting package.
This indicator will even tell you IF you stand a chance to succeed as a trader or if you are doomed to lose your hard earned capital, like most people who try to trade. What amazes me, even more than the power of this simple all important indicator, is how many people don’t know it even exists.
The single most important indicator that you just have to use if you hope to succeed at trading is…
Your actions ‘indicate’ everything you need to know at this exact moment in time for your advancement as a trader. Think about it and you will see that it is 100% true.
Moreover, it doesn’t matter what indicators you put on your chart if you do not pay attention to what your actions are telling you about your trading. It’s a realism that no one can escape from.
Actions Talk & B.S. Walks
Think about it is way: ‘actions are the only language worth listening to.’
Not words. Words are meaningless if not backed up by actions. Listen to the ‘actions.’ That’s where the real truth is revealed.
It’s not what one says. It’s what one does!
It requires a large dose of humility, honesty and being humble to be able to listen to what your own actions are telling you. Yet within the language of your very own actions are the answers to why you are either succeeding or failing at trading.
What you do ‘indicates’ several critical things about your trading, as well as what precisely is the next step that you must take to get yourself onto the pathway to success. That’s a pretty powerful indicator, wouldn’t you say?
What you do actually indicates:
- Why you are trading
- What you want from your trading
- What you are doing to achieve your trading goals (goals you might not fully understand if you don’t listen to your actions)
- What you are afraid of
- What you respect
- What you need to work on to stop losing
- What you need to work on to succeed
Here are some examples that will help you better understand why I put this indicator above and beyond all else.
In fact, they are actually questions whose answers make my point loud and clear for those with the humility to answer them honestly.
- How many times do you intervene with your trade against your trade plan rules? Why do you do that?
- Did you even sit down and write out even a basic trade plan?
- Did you research it yourself? Did you back test it, forward test it and practice it? This will enable you to believe in and have faith in your trading plan
One of the biggest actions we see traders take that is a clear indicator of their ability to succeed is “system jumping”
At Netpicks, we call this “chasing performance”. Traders will take a few losses (even if they fall in line with the expectancy of their trading plan) and then toss the trading system away and seek the next shiny object.
How much time have you wasted (again, actions) jumping from trading strategy to strategy and are still seeking some type of consistency in your trading?
Fear. Greed. Thrills. All “Actions”
Those three items are the wrong reasons to trade but I bet if you were critical of yourself, you’ll see you’ve done at least one of those.
- Greed – Hanging on to a trade pass the obvious exit point because this is the home run trade.
- Fear – Last trade was a loser so you skip the next one. You jump out of a losing trade afraid of losing only to see it turn in your favor
- Thrills – Pushing buttons and the flashing lights and the “ability” to call yourself a trader
Your actions will show you exactly what you are looking for in the market.
I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it. – Ed Sykota
It took me a long time to discover this indicator because:
- I was resistant to the truths it offered.
- I wasn’t honest enough to recognize what I was being told by my very own actions.
Once I finally ate a large plate of steaming humble pie, I was finally able to understand the language of my actions and to acknowledge what they were indicating to me and it was at that point that everything began to change for me.
We actually do get what we want from the market.
Trade To Make Money
There’s only one real reason to trade and that is to make money. Most traders lose money yet they are getting exactly what they are asking for. Not what they’re asking for by the words they speak.
Words are meaningless.
Everybody wants the riches but very few are prepared to suffer the journey to get there.
They are getting what they are asking for with the only language that actually matters. Their actions! Yet, like any language, it is not so easy to learn how to understand it. To understand your actions, you have to be able to understand yourself.
Apply yourself and you can do it though.
Your words say that you do want to be a successful trader, right?
Back it up with actions.
If you are honest and humble, your actions will be understood and they will indicate what it is you need to do to get on the winning track. Then, as Michael Jordan would say, just do it!
Your actions ARE the single most important indicator. If you don’t pay attention to them, your chances of succeeding will be completely dependent upon good luck. So if you decide to remain thirsty and ignore this all important indicator, let me be the first to wish you, Good Luck! You’re going to need it.