Is it because our new tools are so significantly better, or because we’ve gone overboard complicating simple things?
This quote is from an article by Jonas Downey from Signal v. Noise called It’s OK not to use tools. In that post, Jonas describes a project where he was working to improve the website of a local animal shelter.
As he worked on the site, he was tempted to add many of the bells and whistles that have become commonplace in web design. However, he realized that none of these additional components would make it any easier for people to use the site to adopt pets. He also recognized that a much simpler site would be easier to work on for anyone who might need to update the site after he was done.
This is a huge problem for many traders as well. The fancy software packages that we all subscribe to make it incredibly easy to add layer upon layer of indicators and overlays to any type of chart we choose. We have access to Stochastics, MACD, Bollinger Bands, RSI, and hundreds of other indicators, some of which I can’t even pronounce.
With all of these tools available with just the click of our mouse, it is easy to be tempted to use them all. What we need to keep in mind is that we make or lose money based exclusively on price. While there are many different indicators that all have their place in certain instances, they are all secondary to the price.
Clouding our screens with too many indicators, oscillators, and overlays can make even a basic system overly complicated. When you are evaluating your strategy, remember that just because you have access to hundreds of indicators doesn’t necessarily mean that they are a good fit for your trading strategy.