We have previously discussed Price Action or Naked trading – not for you? In this chapter we are going to discuss the alternative, trading while wearing your pants… Just kidding! Of course we’re talking about using indicators.
Indicators analyse price action for you and give clear entry and exit signals. We will cover some of the more popular indicators and discuss how you can apply them to your trading.
Just be aware that no indicator is perfect. Many traders will filter "bad" signals by only taking signals in the direction of the trend ie only taking sell signals in a down trend and vice versa. More on this later – first we will discuss the most popular and widely used indicator: The Moving Average.