One of those things you find out after trading for a long time is that “indicators don’t work”. At least that is the narrative. We are going to interrogate this assertion in this article. Let’s get started!
Market Makers…
The crypto market is worth billions of dollars in capitalisation and rate of trade execution is on millisecond scale. These conditions: huge capital and speed, are made possible by market makers. Market makers are companies that use softwares (mostly built in-house) to provide liquidity on both the buy and sell side in the market. Softwares used by market makers are built out of current and the past market data. This makes this software essentially an indicator, or a group of indicators.
WHY “INDICATORS DON’T WORK”?
a) Trading on Small Timeframes: Market research shows that market trends 25% of the time, some think it is even less. Therefore, if you are a retail trader, and you trade on small timeframes, you tend to generate a large number of signals and a very few number of winning trades, making cost incurred on transaction (leaving out the losing trades) fee bogus. A very effective way to cut this is to trade using big candle timeframes therefore reducing the total number of trades made.
It is better to win 1 out of 4 trades than to win 250 out of 1000 over the same period.
b) Developing your own Indicators: this might sound far fetched, but that is one viable way you can have an edge in the market. Indicators are more efficient when less people know about it.
Other rather obvious reasons indicators don’t work are: using too many indicators, not sticking with one set of indicators (all indicators fail at one point or the other) and so on.
Keeping up with the conditions above to consistently make profit might be a daunting task especially for an individual. That is why we at chartless.co abstract out all these tasks and provide you with well tested strategies out of the box. With our experienced team of engineers and traders, all you have to do is connect your Binance spot or futures account to the chartless trading bot and watch us grow your account.
Disclaimer: the above write up is not a financial advice, kindly do your own research. Happy trading.
Chartless.co provides you with different trading services like market filtering tool and automate trading bots.