Today, I want to share how to use technical indicators in a truly unique and personal way – meaning you will create and use them according to your own style, completely different from anyone else.
Most articles on this blog reflect my personal perspective on applied technical analysis in forex trading. They are subjective, based on my own experience. You can adapt or experiment if it fits your style, and share your insights to help refine your trading journey – which is always full of challenges.
This article focuses on a general approach to using indicators, providing a framework for creating your own custom usage. Specific instructions for individual indicators will follow in later articles.
Why Create Your Own Way of Using Indicators?
Two main reasons:
1. Indicators lag: They are derived from price. Price comes first, then the indicator forms. If we rely on indicators, we are essentially “looking at the shadow to predict the body,” meaning we are reacting to results rather than the cause. This creates delay – a forecast that is always slightly behind.- Using indicators exactly as theory suggests will not be consistently profitable due to the inherent lag.
- If theoretical usage guaranteed success, almost everyone would be profitable, but statistics show only ~5% succeed, and 95% fail. Markets are zero-sum: winners gain from losers.
Hence, creating your own way of using indicators is essential to increase your edge.
8 Steps to Develop Your Unique Indicator System
Step 1: Clear Your Existing Knowledge
- Forget everything you know about using indicators.
- Approach it as a complete beginner, ignoring conventional methods.
- Imagine creating a new martial art: you must first discard all previous techniques.
Step 2: Choose Your Favorite Indicator
- The choice of indicator is secondary to how you will use it.
- Pick one that you like – e.g., Ichimoku, MACD, or a simple Moving Average.
- Only choose one at this stage.
Example: SMA 26
Step 3: Select an Appropriate Timeframe Set
- Pick 3 related timeframes, spaced logically.
- One main timeframe, one higher timeframe for context, and one lower timeframe for precise entry.
Example: M5 – M15 – H1
- Main: M15
- Higher: H1 (context)
- Lower: M5 (entry optimization)
- Spacing matters: avoid choosing intervals too close together (e.g., H1 vs M30).
Step 4: Record and Analyze Patterns Carefully
- Work with a large sample size to ensure accuracy.
- Goal: identify price reversal points (highs and lows) and record the indicator’s behavior at these points.
- Combine observations with trend and volume context.
Example with SMA 26 at M15:
- Uptrend: price far above SMA, SMA slopes upward, volume rises
- Uptrend: price slightly above SMA, SMA flat, volume rises
- Sideways trend: price above SMA, SMA flat, …
- Downtrend: …
- Key: record objectively without imposing prior knowledge or theory.
Step 5: Select Your Highest Probability Technique
- From your statistics, choose the signal with the highest repeatability and accuracy.
- Focus solely on refining and applying this one “signature move”.
Example:
- Price breaks old low, rebounds to SMA 26 while SMA slopes down, volume decreases → strong likelihood of continuation down.
Step 6: Filter Noise Across Timeframes
- Check your signals across higher timeframes to filter false signals.
- Identify patterns when your method works vs. fails to improve accuracy.
Example:
- If M15 shows a sell signal but H1 is in a new uptrend, the M15 signal may fail → avoid entry.
Step 7: Test, Test, and Test Again
- Backtest and demo trade extensively.
Track each trade:
- Win: conditions that worked
- Loss: conditions that failed
- Refine entries, stop-loss, take-profit, and money management.
Step 8: Refine and Expand
- Once your system is consistent, apply it to multiple currency pairs.
- Gradually, you can develop additional signals for lower-probability scenarios.
- Eventually, you will understand market movements and probabilities for many pairs in multiple conditions.
Conclusion
- Using indicators in a unique and personal way allows you to create a high-probability trading system.
- This method may differ from anything you’ve read before, but it’s proven effective for traders who follow this path carefully.
The journey is about observation, statistics, testing, and refinement – not blindly following theory.
Internal Links for Further Reading:
- Japanese Candlestick Patterns – A Beginner’s Guide
- Head and Shoulders Pattern – The Most Reliable Reversal Signal
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