Stop saying “I’ll buy when the sign appears” and you’ll see it — What the indicator’s real role turned out to be, revealed by the verification
and kept repeating aimlessly. Now I understand. The problem wasn’t the settings but,< strong t="11">“letting the indicators decide the direction (buy/sell)”that was the issue.
is my name. I am an active discretionary trader focusing on GOLD (XAUUSD), and, by crunching a lot of data and demo trades, I build my own EA (automatic trading programs). I am currently challenging a prop firm (Firm A).
will be written one by one. Of the five parts, this is the third. The theme is that many beginners fall into< strong t="21">“overreliance on indicators”.
Indicators can become proper tools if used correctly. The problem is< strong t="27">“overreliance” — making them the main decision-maker for direction. I’ll go through this in order.
Repeating a “trade when a signal appears in demo” and somehow not winning
“If this indicator turns up, buy; if that indicator crosses a threshold, sell”and I traded mechanically according to rules I set.
The way you lose each time looked similar. When the market was range-bound, every signal would push me in the opposite direction, resulting in back-and-forth losses. This was the classic pattern.
“When you make an indicator alone the ‘direction main character,’ the edge is very thin in many scenarios”. What’s important here is“That doesn’t mean indicators are bad”. If you shift the role away from dictating direction to something else, the story changes.
Why is it weak to “determine direction with indicators”
There are several reasons, but two big ones that I realized through testing are
most indicators are derived from price data after the fact. Moving averages and oscillators both trace back to “calculated results of past prices.” In other words, they react to price movement after it has happened. So if you use an indicator’s signal as a directional cue, you will inevitablylag behind. When the market is clearly trending, that’s fine, but in range or small moves, a late-signal tends to come just before a reversal. That back-and-forth cutting was exactly what wore me down.
indicator values vary depending on the tool you use. I’ve touched on this in another part of the series, but even with the same “ADX” or “RSI,” calculations from a backtesting tool, MT4, or another tester can yield slightly different values. The calculation method and smoothing approach differ slightly by tool.
This subtly influences things. Even if you set a rule like “buy when this indicator exceeds a threshold,”that numeric threshold itself can shift depending on the environment. A threshold that worked exactly in a demo or testing tool may be slightly different in real accounts, causing it not to work. Methods that rely heavily on indicator values tend to crumble like this.
On the other hand,price itself—the “yesterday’s high,” “recent low,” “range up to today”—is the same no matter the tool. It’s raw, unprocessed fact, so it doesn’t waver. This difference directly informs what should determine direction.
That brings us to the end of the free portion of this article. From here on, the core answer is“So, what should determine direction?”and I’ll describe the concrete four viewpoints for determining direction based on the price structurethat I arrived at after testing, and thenthe order in which to use indicators as “supporting roles”.
Continuing from here (続きを読む) will reveal:
- How to determine directionFour price-structure perspectives(steps of high/low swings, previous day’s range, breakout of a key level, pullback zones)
- How to use indicators assupporting roles = side actorsand make them work
- Even with the same indicator and settings, results can change—the sequence “price → indicator”matters
- Why indicator-reliant methods can bring real costs down to zero expected valueand the reasons.
- A discussion of my self-made tools that make the “end point” visible every day