Haha. Man we’re so funny we even crack ourselves up.
The other option is to use lagging indicators, which aren’t as prone to bogus signals.
Lagging indicators only give signals after the price change is clearly forming a trend. The downside is that you’d be a little late in entering a position.
Often the biggest gains of a trend occur in the first few bars, so by using a lagging indicator you could potentially miss out on much of the profit. And that sucks.
It’s kinda like wearing bell-bottoms in the 1980s and thinking you’re so cool and hip with fashion….
For the purpose of this lesson, let’s broadly categorize all of our technical indicators into one of two categories:
Leading indicators or oscillators
Lagging, trend-following, or momentum indicators
While the two can be supportive of each other, they’re more likely to conflict with each other. We’re not saying that one or the other should be used exclusively, but you must understand the potential pitfalls of each.