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The Reliability of Indicators is Very Much Like the Reliability of Golf Clubs

The Reliability of Indicators is Very Much Like the Reliability of Golf Clubs

2011-05-05 21:38:00
Richard Krivo, Trading Instructor

A huge part of the reliability of the RSI or any other indicator for that matter will be based on the knowledge, skill and understanding of the person who uses and interprets it. On its own, each indicator will provide valid feedback based on how the algorithm behind the indicator interprets price action over the time frame of the chart on which it is placed.

To learn about it the best advice is to practice (demo trade) extensively using the RSI (or your indicator of choice) until its signals, along with its advantages and limitations are fully understood.To create an analogy here, think of a set of golf clubs. The success of the golfer who uses the clubs will dependinfinitely more on the ability of the golfer than on the club itself. If you want to get really good with a 7 Iron, you really practice with it until it becomes second nature to you…until you develop a “feel” for it.

The same can certainly be said of an indicator.As traders we have tools to use...charts, support and resistance levels, indicators, etc. How well we learn to use them will determine, in a very large part, how successfully we will trade.

The next time you see a bad golf shot, remember that it’s not the fault of the club, it’s the fault of the person who is swinging it. The next time you see a bad trade, remember that it’s not the fault of the indicator, it’s the fault of the person interpreting it.

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