Page 194 - THE MARKET WHISPERER

190 PART 7 - Indicators: The Trader’s Compass

up” the charts of stocks in which I am trading, I removed all the indicators
from the display. Do I suggest you do the same? Of course not. After
many years of screen time, I have reached the stage of “understanding”
the charts just as Neo “sees” the matrix. If you’re just starting out, and
even some years into trading, you still need to use indicators to base
your understanding upon and to gain guidance. Over the years to come, I
believe that you will also reach the advanced stage of freeing yourself from
dependence upon indicators. Until such time, use them, understand them,
but don’t take them as given, and do not operate mechanically as though
they are the only instructing factor.

There are many technical indicators, including the RSI, MACD, ADX
and more. The more that technical analysis develops, the more indicators
and new technical tools develop. But a professional trader is assisted by
very few indicators, since during trading there is no time to read multiple
indicators, and because the trader is concentrating on the chart from
which the indicators are derived.

The most important indicator for analyzing a trend is the volume, as it
is one of the few technical tools not derived from the trend and provides
the trader with an important, additional perspective on a stock’s status.
Trade volume is a unique indicator that I am never willing to forego.