Non-indicator Forex trading strategies (without indicators): advantages and disadvantages, list of the best
Indicator-free Forex strategies are used by beginners and experienced traders along with systems that are based on indicator signals.
The main feature of this type of strategy is the absence of any auxiliary tools in the trade in the form of indicators, although it is possible to program such a trading system and create an auxiliary trading robot or advisor and we will give examples below. In these strategies, the trader makes decisions about entering or exiting the deal on his own based on a visual analysis of the price chart.
Such trading can be more effective due to the ability to quickly respond to a changing market situation, to be sure that there are no false positives, to trust only your experience and market cyclicality.
Forex strategies without indicators for creative people
Any indicatorless Forex strategy involves a thorough study of the schedule of price changes and the knowledge of the main features of the fluctuations in the value of the selected asset. The ability to make decisions quickly is also important, because there will be no accurate signals from the “helpers”, as in the case of using indicators, and the trader must decide when to enter the market.
Many years ago, when there were no computers and convenient trading terminals like MeraTrader 4 or Quik with many pre-installed tools, traders analyzed incoming quotes on their own, manually drew charts. Then a graphical analysis was the most effective and often the only possible forecasting method.
Forex strategies without indicators are based on graphical figures or models, the use of different types of charts, candle analysis. Such trading accepts for truth the statement that price takes everything into account. And all changes are cyclical: that is, if the cost has changed in a certain way after some events or behaved according to the algorithm several times, there is a high probability that it will also behave in the future.
Based on historical data, traders have developed and verified various patterns that are taken into account in indicator-free strategies.
Forex trading strategies without indicators of candlestick analysis are also widely used - it is based on the search for certain patterns on the chart ("inner bar", "rails", "pin bar", etc.). Tic-tac-toe, Renko charts are also used: they involve studying the price without reference to the time period, which removes market noise and makes it possible to more clearly see successful entry points to the market.
The method of trading without indicators is quite subjective and to lovers of exact mathematical formulas and methods it may seem complicated. After all, here you need to be able to see figures, find modified models that are never the same. It is important to have well-developed spatial thinking, on the one hand, as well as the ability to really look at the chart (rather than “pull” scattered market changes by the ears), on the other.
Market analysis in this case uses only graphic images and visual perception of the chart. A trader needs to look for constantly repeating gaps and analyze further movement. If the price behaves in a similar way during the study period, then the pattern works and can be used in trading.
Are the indicators bad?
The trading method without the use of indicators is not suitable for all traders. Its adherents cite the inability of the automatic system to take into account all important aspects and make truly balanced decisions or work in an unstable market as the main argument.
In addition, indicators tend to lag - they are based on historical data and can give a signal when it is no longer relevant. But there are many indicators that are able to work more or less efficiently. Often, several tools are used at once to eliminate negative factors, which greatly improves the efficiency of the system.
Regardless of which Forex strategy is chosen (without indicators or an indicator trading system), the trader must be able to independently analyze the market and understand the chart in order to make a balanced decision at any time and make a profit instead of losses.
Choosing Forex strategies without indicators, you need to carefully study the descriptions, view (and perform independently) strategy tests.The main advantages of Forex strategies without indicators:
- Signals can be ahead of the market - a trader will see a trend change to a new one before the end of the old one, having the opportunity to prepare and get the maximum profit (entering the trend at the time of its inception). Indicators can be late or give signals on time (but definitely not ahead of the market).
- High accuracy of signals - in view of the fact that even the most advanced program does not know how to take into account all factors, and man can do it. Especially if the trader already has considerable experience in trading on the chosen strategy.
- An opportunity to gain serious experience in trading - if you only need to press buttons in order to work with indicators, indicator-free strategies require knowledge and the ability to analyze the chart.
- The ability to combine a non-indicator strategy with any other systems, create your own algorithm, changing the rules, adding conditions and creating your own profitable tool, like a constructor. Beginner traders use strategies with 1-2 conditions, but as you gain experience, you can change something.
- Relevance - indicator-free strategies work on conditions that are permanent. Therefore, changing the rules is not necessary at all, because the specifics of the market and the characteristics of changes in assets remain the same. While computer programs require periodic modification, refinement.
Of the shortcomings of indicator-less strategies, many indicate their complexity. Indeed, to use the indicator, it is enough to read its description and receive signals in time, acting in accordance with the instructions. But graphical analysis will have to be done independently - to study, gain experience.
Adherents of non-indicator systems claim that there are systems with very simple rules (and a small number of them) that are easy to work with.
Therefore, in using two different approaches, you just need to focus on your own abilities and wishes. Both methods require dedication, analysis, accumulation of experience, the ability to analyze successful and unsuccessful decisions. And what to choose is up to the trader himself.
Some people prefer accessible and understandable signals, and it is easier for adherents of indicator strategies to have a clear algorithm as a basis. Others trust only themselves and prefer to learn everything from scratch, creating their own rules for graphic analysis, interpretation of the data.
However, the main drawback of indicator-less systems is the subjective interpretation of data. As you gain experience, this minus turns into a plus, but at the very beginning of trading, it may be difficult for a trader to see the necessary figures and repeated values on a chart with a huge amount of data.
What is used in indicatorless strategies
Indicator-free strategies involve the use of a variety of methods and methods for analyzing a chart on which the price of a selected asset is constantly changing.The main strategy tools without an indicator:
- Graphic models (patterns) - combinations of candles, features and the ratio of the points of minimums / maximums of prices. Commonly used in long-term trading.
- Lines of resistance, support, impulse levels and other types of lines.
- Different geometric shapes - triangles, ellipses, rectangles (now about a thousand shapes stand out).
- News - calendar trading on announcements of important events, taking into account the impact of current changes in politics and the economy on the value of an asset.
- Crowd mood - the ability to understand the general mood of the market and play on it (suitable for more experienced traders who are able to navigate in general trends and use any situation to their advantage).
Options for the best strategies without indicators
When choosing a trading method, you need to remember that the price is always primary, everything else is just derivatives. Therefore, the ability to analyze the market and predict future price movements are the main factors of profitable Forex trading.
Trading on non-indicator strategies allows the trader to learn to analyze the market and in the future build work on an intuitive understanding of the nature and cyclicality of price movement. Among the most popular indicator-free Forex strategies, it is worth highlighting such as Lazy Trader, Beginning, and a few more strategies from this site:
1) Everything is simple ⇒
2) Trend Acceleration ⇒
3) Mathematician ⇒