Indicators are widely used by traders, but just because something is widely used doesn't that mean it's good. In fact given that 95% of traders fail it's probably best to stay away from the herd unless you want to end up in the slaughterhouse. So, here are the top 3 reasons why the relative strength indicator will lead to your trading demise.
1. You will lose because it lags.
So the whole point of indicators is to forecast what price is going to do so that you can open a trade and profit, but it's pretty hard to do that when you get in on the move too late and that's what happens when you rely on indicators to make your trading decisions. Indicators don't forecast price movements like people like to think they do, but rather they only give signals after movements have occurred. This will cause you to enter the market too late to profit.
2. You will lose because real traders don't use it.
Do you think the world's elite traders are sitting around waiting for the relative strength indicator to tell them to take a trade? Well let me tell you they most certainly are not. You see they know that indicators lag and because of that they don't use them. You have to realize that these are the people you are up against and if they are getting into to the market while you're sitting on the sidelines then they are going to beat you every time.
3. You will lose as long as you continue to use indicators as a crutch.
If you want to become a successful trader then you need to stop relying on indicators and learn to read the price action for yourself. Once you learn how to analyze what price is doing in real time your trading will improve dramatically. Instead of waiting for an indicator to get you in late you can learn to read the price action so that you can get in quickly and profit.
Relying on the relative strength indicator or any other indicator will only hurt your trading. If you want to become a successful trader that is able to profit at will then you need to understand price action.
Source : azinearticles
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