12 Technical Analysis Forex Tools to AVOID always
This, is the video where I attempt to piss off every. Single active, Forex, trader alive wish, me luck. And. Here it is the Dirty Dozen video I've, been talking about it for a while and people, have been asking about it so here it is now in this video I'm going. To take 12. Technical, tools 12 very, popular. Technical, tools I can, almost guarantee one, at least one of which you, are using right now and I'm going to tell you to stop using it forever and in. This particular, video I'm just gonna go over why. Very, quickly, but every, one of these over time is going to get its own video because it's gonna take a lot of convincing especially, this is something you've used, a lot. Or even if you've used a few of these you're using them in combination. You. Need to be talked out of it because this, is how people and I, can pretty. Much guess if you're out searching, for Forex videos you are one of these people you, are in that 99% I throw this number around a lot too and it's it's probably, higher than 99%. Of spot, forex traders who, are not at a position, where they want to be as far as their overall, success rate month after month year after year now, make no mistake a lot of those people are losing money a, vast. Majority of these 99 percent people are losing badly and we. Need to take steps to fix that too but, let's talk about why that number is so high I mean price. Either goes up or down it's a 50/50, proposition how, can you end up with, a fail. Rate that, is that high first. Off bad money management there, are people who can, actually make pretty good entries, most of the time but money management will always take them down and this channel is going, to have an entire playlist dedicated. To, fixing that because it's not that hard to fix you, just have to have a structure, in place and nobody's ever really given that to you for some reason this is very seldom, talked. About online trading. Psychology is, another thing to where you can have great entries you can have really good money management but as traders we had this unique, ability to. Self-sabotage. And there are many ways you can do that. And this channel is also gonna have a playlist dedicated. To that too we're gonna cover everything but. Way too often. The game is over before even starts, because, you are using terrible. Outdated. Technical, tools on your chart, I don't know how this even started, somehow. A bunch of people got together and said ok we're gonna open up spot for X we're, gonna give people trotting platforms, and we're. Gonna have them use these, tools and indicators even though they haven't been developed. For 4x even though some of them are very old even. Though many of them don't work very well or, they're based on concepts, that you only find in trading equities and, gold and things like that we're. Gonna use them for forex every. Expert out there is going to be using them too and so everything, a new trader sees is. Going to make them think that these are the only tools available and, this is what they're stuck with and that is not the case I need to get you off of these things first so, there. Are videos in place that will explain why I feel the, way I feel and these are my core concept, videos that I recommend, every, single, Forex trader no matter how long you've been doing this must, watch, the, big banks video is the single most important, video I have ever done the, big banks are the people who move price up and down how, can you sit there and be a forex, trader and call yourself a forex trader if you don't even know who these people are and why, they do what they do it's that important, but that's okay you get to go watch that video and you'll know exactly how they operate also, I tell you not to trade reversals, which is a very unpopular video, because most people do but, if I can get you off of this - because, in. Forex. There is no such, thing as overbought, oversold anybody. Who is using this terminology in forex has no idea what they're talking about because, currencies, can go as higher as low as the big banks want them to go before some, kind of government has to step in and maybe make a change but.
Price Can move thousands, and thousands of pips before, that happens there, are so many reversal, traders out there and big banks just eat them up and. There. Are things, that, this. Is kind of where this video is going, it's. Really kind of the theme there are things you must eliminate, out. Of your trading forever. Before, I even start telling you what to do instead because. I could give you I could. Give away my own algorithm, I use to trade professionally, you, would still mess, it up if your psychology, isn't right if your money management isn't right or you. Haven't eliminated all the things that are holding you down all right that's what the elimination video, covers and I've put all these in a playlist and I've linked them all down below so you can go see them at some point because that, alone. If you just spend I think just a little over an hour on all, three of those videos you will, in. A, very very short amount of time become, a much, better, Forex, trader just, based on what you've learned in those videos because almost nobody is talking about them I'm, really surprised how they, spend so much time on the nonsense and so little time on what really matter now a quick programming note before we get into the twelve here you might have seen me list the Dirty Dozen before, and fundamental, analysis, was on there, I'm. Taking, it off because. Don't, get me wrong I don't use fundamental, fundamental analysis. Hardly at all and I don't think you should either but it's going to get its own video but. Fundamental. Analysis, is really kind of the opposite of technical, analysis, and this, Dirty. Dozen from. Here, forward, it is just going to talk about technical tools just. So you know that you might have seen this list before you're gonna probably wonder why fundamental, analysis is no longer on there I've just taken it out and I have replaced it with another indicator, I could, honestly make this a dirty fifteen, or a dirty 16 but these are the twelve that I think are the worst offenders, because I think they're also the most widely used understand. Before we start and I promise, you I'm getting into this but we haven't been able to do this. Whole, spot forex trading very long it just started, up in 1996, for the retail market, we, all remember the Backstreet Boys it, was not that long ago really. And you're gonna notice a theme here that, some of these tools, and indicators, were invented, a long time, ago so, we, can reasonably, assume they, were not made for the market that we trade yet, here we are thinking, they're the only options out there and that's just what we use and we wonder why we fail as often as we do there, are I I'm. Probably under shooting at 10,000. Different. Indicators, and tools that you can put on a chart at any given time and we. Are stuck using the same 12, 13, 14 15 if I. Were to give. You something that was actually made for Forex. And programmed. You. Know six months ago it's. Probably going to be a better option than something, that was made for stocks you know back in the 1970s. If, I were to give you a choice and said okay I need you to get something done here. Is the. Zack Morris brick phone here, is a, modern-day, smartphone which. One do you think would work better you could you, might be able to get it done on the older phone but your chances, are way, way better with the smart phone so. In, trading, because this is your money make, it so here chances are as high as possible and you cannot do that with these tools so, without further ado let's, get, into it number 12 this is the, indicator, that, I have substituted in when I took fundamental. Analysis out it, is the, ADX, indicator. Average directional index built, in 1978. And, it. Has two, aspects, to it most. People use it to measure volume which is good if you're a trend trader you kind of need to know when there's enough volume for you to trade because if not you're going to get killed but. The volume meter on it is just way too slow, and if you try to speed it up it becomes wildly. Inaccurate it just it gets you into the market way later than it should and there's, also a component I guess. Kind of below it it's two indicators in one it's too bad indicators.
In One it's, called the DI directional. Index I guess and, that. Tells you if the market is or. Whatever currency pair you're trading is bullish, or bearish and it, lags I mean, it lags heavier then even, things like stochastic Stu I mean it's very. Very, late if you want talk about an indicator that gets you into everything way too late this, is it it, had to make the list at some point so that's gonna be number twelve number. Eleven, trend. Lines okay so understand, this. Is not I'm not ranking, these I'm just listing these but. If I was ranking these trend. Lines can. Move could very easily be, the worst trend lines are awful first off nobody ever draws them the. Right way there is really no one way to draw them right everybody, draws them differently, and therein. Lies the problem you know do you connect the very tops do you connect where price closed. If. Price, has broken the trend line do you keep it on there everybody has a different idea what. Trendline is supposed to be and it's, really, messy there's no one uniform, way to do it that's a big problem and on top of that there's just way too many options if you, were to show me any chart, right now on any time frame I could probably draw, five. Or six different trend lines you know which one do you think the markets are going to respect well, the answer is probably, none. Of them because for one once you discover there's even a trend in place it's, typically, over, that, ever happened to you you, have price. Has I'm doing air quotes hit, three, points on the trendline and then you use it and all. Of a sudden price, no longer cares about the trendline that's. Because. There's. Really no such thing as diagonal support, or resistance, we're. Gonna talk about regular support and resistance, in just a little bit but if you really think the. Bank's actually care, at all about. Support and resistance that, goes diagonally, you're crazy. There's, the. Video and this is gonna be great because I could talk about trend lines forever, and why they're terrible but, if there's one thing if I do one thing in this entire video please, now and forever take, trend lines off your charts and never bring them back number. 10, stochastic. S--. 1950s. Yes. You, are using an indicator from, the 1950s. As if. Nothing, has ever evolved. Since then and. It's based on overbought and oversold which, already, especially if you watch that reversal video you have understood, by now that, that's not even really a thing in forex, so I could just really stop here and that. Would be reason enough for you to never use this again but, it it, doesn't even do a good job of showing overbought and oversold I know stock traders that hate this indicator, because, there. It. Gives so many false signals, even. When price is range-bound but, then on top of that when, it price, actually trends, traders, get a bowl iterated, because. Reversal, traders are always looking for reversals, and they're gonna do that when price is trending and if. Price just keeps trending stochastic sizz going to give you so many bad, signals, that any money you might have made during the range-bound period, you are going to lose during. The trending period and then some and yes, if you look up here there is a fast and a slow version of stochastic sand there's a bunch of in between versions, you can use to depend on put your settings I have used them all I have tested them all they, are all terrible. On to, number nine, price. Levels so this is not something that actually, it's. Not an actual program, tool, that goes on your charts but, we know what price levels are right if you have a round number, say like the euro dollar at a one, dollar thirty cents even, that's. Considered, a price, level and people think that is an, actual point in time that you should give a about not. The case because, they also say the same thing when price. Ends in 500. Or 20. Or 80, there's. Just way too many, options out there that people tell you to use they wait for something to actually happen and then in hindsight they say hey look price. Had rebounded off the fifty level or the twenty level way. Too, many options and, they're not really psychological. Levels people love to call them this that's not what it is where, ever heavy, amounts, of trading are happening, that's, what the big banks see and if they just so happen to occur at, one of these levels the, big banks are gonna see it and they're going to react accordingly but, here's the thing you have no idea at what price this is going to have the price of the euro dollar could skyrocket, past. A dollar thirty past, a dollar thirty one and then finally bounce, off one thirty two for a little bit and everybody. Goes nuts say, hey look it, bounced off this psychological, level that.
Doesn't Help you why, didn't react to a dollar thirty why, didn't it react to a dollar thirty one you. Know this would have been really helpful to know beforehand, but you don't price, levels are not helpful and they, only look good in hindsight. Number. Eight the. CCI indicator. Commodity. Channel index is. Something. People use for trends and reversals, it was built in 1980, and it's just it's, just too jerky it. Gets, you into everything way, too quick. Which, is not a good thing in this, market, being too early is no good being too late snow good either and it's just way too over-reactive, no, matter how much you try to smooth it out it just doesn't, work it's. Almost like you know we all have that friend or, that co-worker that, just, flips out over everything, to just completely overreact, to every, thing that most people would just kind of write off, you. Wouldn't give that person, your money to invest he would not trust them to make good decisions and that, person is the CCI indicator and people. For. Some reason when he's reversals, and use it for trends they think they found a way but, it's. It just moves, way too, fast and if you try to smooth it out you completely. Fritz, out the mechanics, of the indicator itself it's. I really, got excited this one when I first found it I thought I had some some, ways to make it work I tried, everything and it just failed, every, single time. Number. Seven, support. And resistance lines okay, this, might just be the most popular, one, of the entire 12 and. It's. Gonna take a lot of convincing to get you to take these off your chart but hear me out on this there's. Just too many possibilities. On this, one there's too many lines that can be drawn on a chart support and resistance wise on any, given time people, use all sorts of different, timeframes, even. Within, let's just say the daily timeframe there's. Three. Or four lines that, are very easy to draw and they're very easy to see this isn't like trend lines where everybody draws them different pretty. Much if a, support line goes here that's where it goes and every single trader can see them way too easily, now. What happens when everybody can see them everybody. Wants to use them and you, all of a sudden have become very, popular you. Have created, a hot spot on a chart with a lot of trading action, and guess, who sees that the, big banks and they absolutely feast. Off of it they're gonna find, what. Direction, most of those orders and most of those trays are going to go they're gonna trip those orders and they're gonna take price the other way until they have knocked out every single stop-loss, they can this. Is one of the biggest contributors to that 99 percent number because so many people use. Them, number. Six. Japanese. Candlesticks, 18th. Century what. Are you doing using, these things they're. Really easy to spot when they work so for example a Japanese, candlestick, pattern be like a hammer for. Example, but. You're not slick you're not the only person that saw the hammer everybody, saw it. And what, happens is every when you see them everybody, reacts to them and then, the big banks go right after you you, might see a hammer that works really well because, price reversed, and that's a really easy thing to see on a chart but, you probably got lazy and you, missed, the points on the chart were three other hammers completely failed the. Banks will give traders, a win every once in a while to keep them in the game it's called the blackjack theory I've gone over that in my big Pink's video but right now go to any currency. Chart you want I guarantee there's me a bunch of hammers that didn't do what they were supposed to do and, you. Didn't even see him but, that one that did work looks super cool and he got really excited and. You ended up setting up yourself to fail, number. Five and, I put this one after, Japanese, candlesticks, because you know in a way they kind of go together but just chart patterns in general you know we all have chart patterns right, but they're really much better for stock trading because most chart patterns are based, on trader, sentiment, and trader, sentiment, is not something, we really use unless we're going against it but there's not really a whole lot of ways to find out you, know where the money is going that's the information that the banks know that we don't that's the one handicap we have but. For that reason really, chart patterns don't.
Really Work that well there's still too easy to see for the most part if a, triangle, is forming, on a particular, currency, pair you really don't need somebody to tell you that you have two eyes you can see the triangle. Is obviously forming, but, what's gonna happen is, traders. Will put orders, above. And below or just above or just below but either way pick. Banks love to whipsaw here if they love does take, those orders trigger them take price the other way make you panic and then after you've exited, the trade at a loss then, they decide where price is actually going to go and they, love doing this with, chart patterns because they are very easy to see and traders, really, like to trade them moving, on to number, four I forgot, when number four was oboe injure bands yes early. 80s for these people love Bollinger, Bands so. Around, 1982-83 something. Like that John Bollinger came up with these and they. Are heavily reliant on the whole idea of overbought, and oversold which. If you were watch the reversals, video you will, realize is not really a thing so, from. The start this indicator, was very, faulty problem, works pretty well in stock trading actually, you know there are certain points where stocks can get over stretched but. Currency is not the case and some, people do use them to call trends but. When it does that it. Has the tendency to take you out of that trend too early I'm a trend trader I want. To get those really really long runs give me a ton of pips and, Bollinger. Bands don't, allow me to do that because as soon as price retraces they, tend to tell me okay the trend is over and you should exit, so. You should just know by now if, you're trading spot forex anything, that has to do with, a currency, being overbought or oversold or, something. That's gonna help you trade a reversal, just doesn't need to be in your chart to begin with number. Three. Fibonacci. This. Is gonna piss a lot of people off so. Fibonacci. Has way too many possibilities to again. You could show me any chart, any timeframe I could draw about. Five or six Fibonacci. Retracements. On any. Chart there's, way too many possibilities, and what does Fibonacci have to it like five six. Lines depending, on how you set it up that's, gonna end up being a lot of lines on one chart price, is gonna probably balance off one of those lines but you have no idea which one if there, is any indicator, out there that looks really really great in hindsight but never works when you do it it's Fibonacci, and it's fundamentally, flawed from the get-go it's based on patterns, that happen in nature and, on, planet earth and that just has nothing to do with. The way spot forex is set up and it, again, it's too reliant on overbought oversold very, few people use Fibonacci to, trade breakouts or a trade trends so just, right. Before it even goes on your chart there's so many things wrong with it number. Two is the RSI. The. Relative strength index. Back. In 1978, somebody, came together and put this together for stocks and it, didn't even work, for. Stocks that way like most stock traders I know hate the RSI, so if it doesn't even work well for what it was created for it's not gonna work really well for, Forex. Either but this is really, heavily researched, heavily. Used and there when. You see all these things in, front, of you there is no surprise to. Me anymore why that, 99 percent is where it is and again. It's almost used exclusively for, overbought or oversold I, just keep saying it on. To. Number one and. This. Might surprise a couple of you but, because I haven't really talked about it yet but, there is a ray. Of light to this one and it is moving average, crossovers. So. It's not terrible. They. Have a tendency to work in certain situations, but it's just not that great either because first, off it's, like seeing a hammer just. Because you can draw a 50 a 100, and 200 SMA, on your chart doesn't, mean you know something, somebody doesn't you know you're about to make yourself a very popular, when price approaches, one of those levels or, when. Those, two moving averages cross and. It just gets you in too, late. I. Have. A way that, can get you in much sooner and that's. The approach I'm going to talk about when I make that moving average crossover video but. On any, given day I am probably entering, a trend before, you, because. You. Are using moving average crossovers, and you're just getting in too late, it almost might be a situation, where it's a trade to where I'm gonna makes a little bit I'm gonna actually make a little bit of money and you're, gonna lose the trade all together and you, just can't afford to have those things happening, to you over and over again that's the danger of getting into a trade too late too, early is no good to lates no good either so as I had mentioned before I'm, going to make an individual.
Video On every single one of these you can kind of see where my headspace is and I can hopefully especially. If you're using them right now get. You away from them forever it's, a hard sell because you spend so much time on and you've just played. Around with it so often and try to develop your own systems, with these tools but, the sooner I can get them out of your trading toolbox the better and, as. Is going to be the case with this moving average crossover video I am going to give you a much better option I'm, going to do that on some of these videos and then going forward I'm gonna have other videos where I release some of the really really, good tools and indicators that I have used over the years as well so. If you'd like to see that and you, also want to learn some really good trading psychology and, money management tactics, subscribe, to the channel it's. Here for you I mean who else is, talking about this who else is saying here are 12 really really common indicators, that everybody uses and loves and you should not use any of them. Nobody, but, I would have never become a forest prop trader had I had not done this first you really have to eliminate a lot of this stuff before you can even think about moving forward but following the same tired, advice with the same tired, old, technical. Tools being. Used every time is not going to get you anywhere you, need a channel like this to help you move forward and this is what I put together I have new videos that come out every week I have a podcast that comes out every week so many directions for you to go I'm gonna link it all down below but, either way subscribe, hit, that bell and, we're gonna do some things here guys let's go get it.