The Power of Trading with ONE Indicator
Add more indicators and you’ll get more mixed signals and confusion, leading to analysis paralysis. What if massive improvement in your trading results could come from subtracting nearly everything from your charts?
Strip down your decision-making process and use one single indicator to improve trade accuracy and clarity. Master one tool completely – understanding its subtleties, strengths, and weaknesses – rather than passively watching arbitrary signals from multiple indicators.
Choose Your Power Indicator Based on Your Trading Personality
Primary Function: Trend-Following – smoothes price data to identify trend direction
Best For: Traders who prefer riding trends and don’t mind pullbacks
Recommended Settings: 50 EMA for medium-term trends, 200 EMA for long-term confirmation
Primary Function: Momentum Oscillator – measures speed and change of price movements
Best For: Traders who like catching tops/bottoms and capturing reversals
Recommended Settings: 14-period setting, look for divergence patterns for powerful reversal signals
Primary Function: Volatility Indicator – shows average price with expanding/contracting bands
Best For: Traders who thrive on breakouts and mean-reversion strategies
Recommended Settings: 20-period with 2 standard deviations – watch for “squeeze” patterns
Trading Strategies with ONE Indicator
Buy Setup: Price above 50 EMA + pullback to MA + bullish candlestick pattern at bounce
Sell Setup: Price below 50 EMA + rally to MA + bearish candlestick pattern at rejection
Risk Management: Stop below swing low (buys) or above swing high (sells). Take profit at nearest key S/R level.
Philosophy: Ride the trend by entering on pullbacks to the moving average.
Buy Setup: RSI crosses below 30 (oversold) then back above 30 + bullish candlestick confirmation
Sell Setup: RSI crosses above 70 (overbought) then back below 70 + bearish candlestick confirmation
Pro Tip: Combine RSI signals with major support/resistance levels for high-probability setups.
Philosophy: Catch market turning points at overbought/oversold extremes.
Squeeze Breakout: Bands contract tightly (squeeze) + buy on close above upper band or sell on close below lower band
Mean Reversion: In ranging markets, sell at upper band, buy at lower band, target middle band
Pro Tip: Strong breakout candles are much better signals than small wicks poking outside bands.
Philosophy: Trade low-volatility compression periods that lead to high-volatility expansions.
4 Critical Mistakes to Avoid with ONE Indicator
❌ Trading Blindly Without Context: Never trade indicator signals without confirming price action and support/resistance levels. An RSI buy signal in a strong downtrend is a losing trade.
❌ Ignoring Settings Optimization: Always backtest default settings for your style and market conditions. A 14-period RSI may be ideal for Daily charts but too slow for 5-minute charts.
❌ Jumping on Unconfirmed Signals: Not all indicator readings are high-probability. RSI above 70 isn’t a sell signal – it’s a warning. Wait for confirmation (cross back below 70).
❌ Neglecting Risk Management: Perfect signals mean nothing without proper risk management. Always use stop-losses and maintain at least 1:1.5 risk-reward ratio.
Conclusion: Clarity Comes From Cutting Out the Clutter
Trading forex profitably with just one indicator provides clearer signals and better results. The road to trading mastery isn’t through more complexity and tools, but through deeper understanding of a single, well-chosen indicator.
Choose one indicator that suits your style and master it completely – knowing its signals intimately and interpreting them in context of price action and market structure. Throw out the clutter that most traders drown in and focus only on what’s important.
Stop buying indicator after indicator and start mastering one. Your charts will look cleaner, your mind will be clearer, and you’ll make better, more consistent trading decisions that lead to long-term profitability.