Hey hey: what's up my friends, so in today's episode right i want to talk about how many indicators should you use in your trading? Okay, so a mistake that i see many traders make, and you know me myself included. I made this mistake is that in my early years of trading right, i have at least four indicators on my chart. You know i have indicators like the stochastic, the rsi, the cci etc on my charts, and i would wait for all these indicators to point in the same direction before i take on the trade. For example, i will look for the stochastic to be over so rsi to be oversold cci to be oversold and then right.

I would enter the market right thinking that the market is about to reverse higher, because so many indicators are pointing that the market is oversold right, but that couldn't be further from the truth. Right because a mistake that i made is that if you realize right these indicators right, they all belong to the uh category called oscillators right. They have similar mathematical formula right, the rsi, the stochastic, the cci. They have similar mathematical formula behind it.

So when one goes up, the other indicators will point up at the same time, so clearly right having more indicators on my chart right it doesn't, you know, reinforce my uh, my uh, doesn't you know, increase the probability of the trade you know working out? In fact, it's quite silly actually so another question is you know how many indicators right should i use then right. Should i just use one indicator since you know there might be a duplicate. So that's what we'll tackle in today's episode right so, first and foremost, all right. I want you to think about take a step back and think about.

You know what is the purpose of an indicator? Okay, so, in my opinion, right an indicator. A trading indicator can be used right for four main categories: all right number one. It can be used to help you to define the trade. For example, you can use a 200-day moving average to help you define.

You know what is the long-term trend if the price is above the 200 moving average. The long-term trend is up right and, if it's below it, the long-term trend is down. So that's the first purpose defining the trend. The second thing you can do is you can use indicator to help you identify your area of value.

So what is area of value? So you know things like tools like support resistance trend lines. These are tools that can help you identify your area of value and again right indicators can help you with it. You can use things like you know. Like your pivot points, you know your r1, your s1, to help you identify a support resistance in the market.

You can use uh, for example, tools like moving average to help you identify the area of value in the trending market, so these are again right. Uh second, category right, defining your area of value, and the third thing that you can use with indicators right is that they help you to uh time your entry try to help you serve as an entry trigger to get into a trade. So what do i mean by entry trigger so an entry trigger could be something as simple as you know, uh the trigger to put you into trade like let's say, for example, the stochastic cross above 20. That could be a trigger to buy.

I'm not saying you buy blindly when stochastic goes above 20, but if all other conditions are met right and stochastic starts to cross above 20. You can say that you know hey, you know: uh bullish momentum is coming to market right when stochastic cross above 20. I will buy so that could serve as an entry trigger, but more often people use candlestick patterns as entry trigger, like you know, a bullish, hammer, a bearish, engulfing pattern, etc. So that is uh.

What i mean by entry trigger and the fourth category is trade management. This is where indicators can shine right. You can use your indicators like uh. Let's say parabolics are to trail your stop loss.

You can use the dungeon channel to trail your stop-loss. You can use the average to range indicator to help. You set your initial stop-loss. You know this is how you know you can use indicators to manage your trades all right.

So these are the four main categories right that you know, indicators can help you with your trading. So now the question is again right: how many indicators should i use? Well that depends on what do you need? Do you need a tool to help you define the trend? Do you need an indicator to help? You know time your entry? Do you need an indicator to help? You manage your trade, so once you can answer those questions, then you know which or rather what are the appropriate indicators that you should be using. So, for example, let's say you are an indicator junkie right. You want to use indicators to help.

You know uh enter exit, manage your trades right. Then i would say you know that you can use. You know four indicators, one to help. You define the trend, one to define your area of value, one is an entry trigger and one two manage your trade for indicators.

Or maybe you are someone who is familiar with price action trading. You can define your trend using. You know, price action. You can identify your area of value using support resistance trend line.

You don't need indicators for it right or maybe you also can use a price action to help. You know time your entry using candlestick patterns, then at this point right. Maybe the only indicator that you need to manage your trade is for trade management. Maybe you can use an indicator like a moving average et cetera.

So that's one indicator that you just need right. So so can you see where i'm coming from? Is that there is no right, i mean there is no best combination of indicators that you must be using, because it all depends right on your needs as a trader, so think about these four categories that i've just shared with you right. What indicators can be used for number one to help? You define the trend? Number two help: you define the area of value number three to serve as an entry trigger to enter a trade at number four, as a trade management tool right to help. You manage your trade right.

So if you have uh, if you need things right help, you manage these four categories. That indicators can help you with it. But if you don't need indicators for it right then hit you don't have to use it. Does it make sense? So with that said, i have come to the end of today's episode.

I'll talk to you soon. You.