Markets are strange and peculiar animals, because they are in the business of putting the things that are known about them out of business.
There was a time when a trader could draw some trend lines on a chart and some support and resistance lines and they would work like crazy because almost nobody knew about them. This was back in the late 19th century. They still have some value today, but the difference is that millions of traders are looking at them now.
There was a time when you could look at flags, rates-of-change, MACD, ADX, etc., etc. and they would be clean and relatively fake-out free. No longer. The markets have wized up to those things and many others. The usual and known indicators, even in complex forms, are anticipated now, and thus much less amenable to profit. You may have to take some time to find this out for yourself.
It is folly to suppose that a market is going to reward you for using things that virtually everyone else in that market is also aware of. It has no mechanism for doing so. It has no mechanism for rewarding traders when they are using things that are common knowledge among other traders and investors.
To use an example from fundamental analysis, when Benjamin Graham in the early 1930's devised his methods of valuing companies based on their intrinsic economic value, his methods worked like crazy because they were almost unknown.
Yet those same methods all but stopped working by the 1970's because there was now a horde of analysts using them, thereby drastically reducing the possibilities for success using those methods. Many other examples could be given.
A person can always get lucky for a limited time, but the markets cannot reward you consistently for approaching them in ways that are similar to everyone else's. It has no way of performing such magic, like giving candy to a child. Markets deal in psychological reality, and they are always right.
There was a time when charts themselves were a rarity. Now virtually all serious traders have electronic screens with all the standard indicators already built in. Tweaking these standard indicators a bit isn't going to help you when you are up against institutions and trading desks and professional traders and floor traders and market makers, all with access to unique advantages.
The individual trader and investor also has some unique advantages, but these are not immediately obvious. Though not readily apparent, they must be wielded with great clarity and insight to prevail.
It is imperative to be using something that the market knows very little about, because markets will keep constantly shaking out traders who are using indicators that are commonly available, or constructed upon technology that is commonly available. Indeed that is part of a market's job, to only reward those who have truly earned its beneficence.
Markets are not the easy money-transfer machines that traders sometimes imagine them to be. Profits in a trading situation must be earned by superior analysis, impeccable risk-management and clear-sighted perception.
The realities of the situation in modern-day trading and investing must be fully grasped and then used. Only then will the market deign to shine upon the positions, planted so hopefully, of the modern-day trader and investor.
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