Unit 1 · Level 3 · Indicators
What indicators really are
You trade with a plan now, so it's time for sharper tools. First truth about indicators: every single one is MATH DONE ON PAST PRICES. RSI, MACD, Bollinger, all of them are recycled price data, redrawn. They reveal nothing the chart doesn't already contain. What they add is a clearer LENS.
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What you get asked
Where does every indicator get its data?
Indicators are derivatives of the tape: organized hindsight that helps you see structure. No shame in that, but keep it in mind.
If indicators only reprocess past prices, why do professionals still use them?
A lens, not a prophet. The value is CONSISTENCY: the same conditions always produce the same reading, which makes your rules testable. Remember expectancy?
Match the indicator family to its question
Four families, four questions. Every famous indicator answers one of them.
An indicator should ___ a trade idea from levels and structure, never replace it.
Structure first (League 2), indicator second. Traders who invert this order end up serving the tool instead of the trade.
A trader loads 9 indicators until the chart looks like a rainbow explosion. Formi calls this…
Every added indicator is another voice in the room. Past three, it stops being analysis and turns into a séance. We'll master a focused kit. 🐜
The rest of this unit
RSI, MACD, Bollinger Bands, and confluence: interrogating witnesses without obeying them.