I’ve tested over 2000, but I’ve looked at well over 5000.
Some don’t even pass the eye test, and knowing how to spot duds like this has saved me loads of time.
Episode 32’s question is from Maciej
“Would you have some tips for me on pre-filtering indicators?”
Maciej from Berlin, Germany
Second question from Berlin I think! Germans are born critical thinkers, and ask good questions.
And yes, I certainly do have some tips here.
Backtesting vs Dismissing
Do we all know how to backtest Forex indicators by now?
If not, that’s fine, it was one of my better blog posts, and is a must-read.
If you see an indicator, and you think, even a little bit, that it has a chance of maybe becoming part of your system — by all means test it out.
You may not want to, because it takes time, but always remember the potential upside here.
Most of the indicators I use now were not ones I fell in love with right away. I’m glad I sucked it up and tested them.
Really glad. Really REALLY glad.
But there are some that I knew from the start had no chances of making my little indicator harem. They fell into certain categories that made their chances of making the cut damn near impossible.
Since many of you are looking to trade my way, by sharing these categories with you, you should be able to sort though these a lot quicker.
*But don’t get lazy! Don’t let this be an excuse to push aside indicators with real potential just because you can’t see it right away.
The 5 Categories of Useless Forex Indicators
These are the five categories of indicators which are virtually useless in the No Nonsense Forex trading system.
If you see them, safely hit the back button, and resume your search.
Indicators Which Do Nothing But Follow Price
You programmed an indicator, and gave me this?
Was this a joke?
And there are even more flagrant examples than this!
These cannot help you in any way.
Indicators Which Don’t Even Work Well in the Example
When a programmer builds an indicator, they want to show off their work. Their name is usually somewhere on it after all.
So they do essentially the same thing scammers do and cherry-pick really great places where the indicator they created worked like a charm.
If they can’t even do THIS…..the odds against that thing being any good are really high.
And this one was FOR SALE!!
We’ve talked about how to approach buying indicators, if you haven’t seen that episode, and the biggest disadvantage you have there is you cannot test them.
So you must blindly assume it works well, and when the programmer can’t even show you that….
You can afford to eliminate these.
Too Many Signals
Look, some indis are going to give you more signals than others. It doesn’t make them good or bad.
But some are just downright schizophrenic.
I know you can smooth and modify most of these indicators, but some of them are so erratic from the start, that there is only a tiny chance you’re going to make it awesome.
Now I know, this is indicator is based on GRAB candles (Green Red And Blue), which had its day, but this thing is an abomination.
If you used this thing, even if you combined it with better ones, you’d end up taking way too many trades, and exiting way too soon.
Not to mention the impending brain aneurysm that’s soon to follow.
If you ever see shit like this, pass with confidence.
Indicators Offering Suport/Resistance Levels of Any Type
Support and Resistance lines are part of the Dirty Dozen.
We don’t use them here.
These indicators attempt to predict a point on the chart where price is going to break out or reverse.
This is not something you can really know in advance.
If you see anything offering these types of lines on a chart, you can simply pass and keep looking.
Anything with the words “pivot”, “gann”, “channel”, etc also fall into this category.
Sure, they look cool and all.
But this isn’t a beauty contest. It’s a money contest. And these indicators don’t make the cut.
Indicators You Cannot Adjust
The balls on these indicators, I swear!
Part of creating an algorithm that is 100% your own is being able to tweak and improve on what a bunch of no-trading-ass programmers made for you.
How can anyone say “this is the best version”, if they’ve never tested others?
And would they even know how to test?
This is the same as people who use tools from the Dirty Dozen, then sit there and say it’s the best way to trade.
How on Earth would you know?
There are over 10,000 tools, you’ve tried eight of them, and you’re gonna sit there and say that shit to me?
Okay, rant over.
Bottom line: if you can’t adjust it, you can throw it away if you want.
If I come up with any more, I’ll add them. I’m sure I will. Some are just downright hilarious.
Listen to me closely….
Do not allow this to make you overly-dismissive, just so you can save yourself some time.
But if you are clearly dealing with one of these types of indicators, you can safely move on, and put that time right back into your pocket.
Now will you use that time to lock down your future by testing further, or will you use it to watch more Netflix?
I guess that part is up to you.