Indicators. They suck.

In trading commodities or currency (forex), the best thing to do is stick to what the other investors are thinking. Traders tend to use complicated indicators or some prestigiously-long-bombastic named indicators to trade. They are tons of experts out there who understand the maths behind all those indicators, follow them and still make quite a huge margin of losses. Why?

Trading commodities or forex IMO based on only 2 contexts. (1) NEWS. (2) investors' psychology. This kind of trading based on the herd. The more frequent an indicator is used, the better it will perform. However, the most common mistake investors (i would call them traders) make is trade solely on a few type of indicators, and forget about the herd of traders behind them. I watched the foreign exchange for past few months, and realized 1 big thing -- trading is insanely addictive.

The basic ideas that people tend to forget (as they learn more about indicators) are the support and resistance theory, the trend line and simple candlestick theory. Support resistance can be said as the most widely use trading concept that traders start off with (100% i bet). however, experts are dumb. especially those who charge you for trading with them.

I personally follow a few forex blogs. so called experts. all i can say that less than 50% of their prediction holds true (it is supposed to be a 50-50 thing). and if i were to trade commodities or forex, i would never trade with them. However, trying on an account, i realize that it will be hard to control your so called emotion when ur heart is beating at a rate of 250 per minute. :) false breakthrough occurs like a million times a day, and only one of them is the right one.

catching breakthrough is hard, however, i would prefer catching it after the breakthrough is confirmed although i have to forgo a few pips (or points). jumping into the market after a resistance breakthrough is rewarding, but highly risky (i failed like a gazillion times). i prefer jumping in after a 10 pips breakthrough on a strong physiological level (like the 1.600 of GBP-USD during the QE2) or a 15 or more pips. I don't use indicators (although i would peep at them) and trade based only on S&R line, trend line, and indecision candle and breakthrough. At least these will be the principle that i will hold on to on the upcoming commodities challenge.

PS: I hope I could make it to the 2nd round of the CME challenge. :) who knows i might score an internship with CME :)