Keep it simple

It seems to be human nature to believe that a more complex system must intrinsically be better than a simple system, especially in the field of technical analysis and trading system design. This can be observed in the custom-made indicators and systems that some users create in their search for the ultimate indicator, the so-called Holy Grail. In reality, the users of many of these complex indicators or systems are running a very high risk of using them incorrectly and/or misinterpreting the results. Remember, as we discussed in chapter 1, there is really only one Holy Grail when it comes to trading financial markets, and this is diligent money management.

Those who have the time, experience, patience and funding to test complex systems may eventually gain a small edge, but the majority of traders are probably better off applying the KISS principle (keep it simple, stupid) and sticking to the tried and trusted techniques that have benefited technical analysts and traders for many decades (some of which will be discussed in the following chapters). There is no need to reinvent the wheel. Proper application of simple tools will help you to trade successfully. Some good examples of the tools you may wish to use ‘straight out of the box’ are: