Tools I Don't Trust

This section is about popular trading tools I disagree with or that I think are of poor quality: indicators, patterns, schools of analysis, strategies and products that often appear in courses and ads. I'm not claiming nobody makes money with them. I explain why I don't base my own decisions on them: what research says, what their weaknesses are, and what order flow shows in the same place.

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Each tool gets my rating in one of three categories:

• I avoid it Tools and products I don't use and wouldn't recommend: no evidence, poor design, or a business model that makes money off you.
• I don't trust it Popular, but in my view built on weak foundations: lagging, subjective or with no evidence that they work. I explain why I don't base decisions on them.
• Only with great caution Tools that make sense at most as background or context, not as a signal. I have some of them on my own chart, but I know what they don't show.

I avoid it (13)

• Repainting Indicators: Why the History Looks Perfect
  Indicators · An indicator that changes the past always looks brilliant on history. Live, I don't use anything that repaints.
• Elliott Waves: An Elegant Theory You Can't Verify in Advance
  Theories and schools · The theory can be fitted to any chart after the fact, but it can't be verified in advance.
• Harmonic Patterns: Gartley, Butterfly and ABCD – Geometry Built From Fibonacci Ratios
  Theories and schools · Geometry built from Fibonacci ratios, with no evidence that it works.
• The Gann Method: Angles, Squares and a Legend That's Hard to Verify
  Theories and schools · A legend that can't be verified. Angles and dates are closer to numerology than analysis.
• Trading bots, Expert Advisors and AI: what is true and what is marketing
  Styles, systems and products · Off-the-shelf bots and “AI” are mostly marketing. Nobody sells a working money machine.
• Copy trading: copying someone else's results – and their risk
  Styles, systems and products · You copy someone else's risk, and the results leaderboard is often survivorship bias.
• Hedging and “Locking” on Forex: An Opposite Position That Hedges Nothing
  Styles, systems and products · A lock is a loss frozen for a fee. The result is the same as closing the position, only more expensive and with the decision postponed.
• Martingale and grid trading: strategies that win often and lose once – but everything
  Styles, systems and products · They win often and lose rarely – but when they lose, they lose everything.
• “The Best TradingView Indicator”: Why It Doesn't Exist, and Why Paid Versions Don't Change That
  Styles, systems and products · No such indicator exists, and the paid versions are the same data in a different colour.
• Binary options: a product banned for retail clients in the EU
  Styles, systems and products · A product banned for retail clients in the EU – and for good reason.
• “The Simplest and Most Effective Strategy”: Why Slogans Like That Are a Red Flag
  Styles, systems and products · It's a marketing slogan: a simple, effective and free strategy would quickly stop working.
• Trading signals on Telegram: how the business works
  Styles, systems and products · This business makes money from subscriptions and referrals, not from results.
• Volume, Delta and “Order Flow” on Forex and CFDs: What the Broker's Platform Really Shows
  Styles, systems and products · Delta and footprint from broker data are estimates. Order flow only makes sense on an exchange with a single order book, like the CME.

I don't trust it (31)

• ADX: Trend Strength Without Direction, and With a Big Lag
  Indicators · A big lag and no direction. Price structure alone gives you the same picture.
• CCI and Williams %R: oscillators that measure the same thing with a different formula
  Indicators · More oscillators from the same prices. They add no new information.
• RSI and MACD Divergences: Why They're So Convincing and Fail So Often
  Indicators · A trend can continue through many divergences, and looking back we only remember the ones that worked.
• Ichimoku Kinko Hyo: A Cloud Full of Lines, but Still From the Same Prices
  Indicators · Five lines from the same highs and lows: more drawing, not more information.
• MACD: What It Shows, and What No Histogram Will Ever Show You
  Indicators · It's averages of averages, so it lags twice over and tells you nothing you can't see in price itself.
• Parabolic SAR: Dots That Are Always in the Market
  Indicators · It's always in the market, so in consolidation it loses time after time.
• The Stochastic Oscillator and Stochastic RSI: Quick Signals, Quick Disappointments
  Indicators · Intraday it gives so many signals that most of them are noise.
• Supertrend: A Popular TradingView Indicator Under the Microscope
  Indicators · It looks great on history, but in consolidation it gives a series of false flips.
• The Broker Sentiment Indicator: How Many Clients Are Long, How Many Short, and What Follows
  Indicators · The percentage of one broker's clients is a curiosity. If I want to know how the market is positioned, I look at the COT report.
• Golden Cross and Death Cross: Headline Signals From the 50 and 200 Averages
  Indicators · A headline signal that arrives long after the move.
• Fair Value Gap (FVG): What It Is, How It's Marked and Whether the Market Has to “Fill” It
  Levels and drawing tools · It's simply a fast move on candles. In the volume profile I can see how much was actually traded in that gap, so I don't have to guess.
• Fibonacci Retracements: Why 61.8% Works Best on Past Charts
  Levels and drawing tools · There's no evidence the market “knows” 61.8%, and the anchor points are chosen after the fact.
• Trendlines: How to Draw Them Honestly and Why Breakouts Are Often False
  Levels and drawing tools · Everyone draws them a little differently, and breakouts from them are often false.
• Price Gaps: “Gaps Always Fill” – a Myth With a Grain of Truth
  Levels and drawing tools · “Gaps always fill” is a myth. What matters is the context and whether the market accepted the new price.
• Candle Range Theory (CRT): a trendy TikTok theory in the light of data
  Theories and schools · It's the old false breakout under a new name. It doesn't distinguish a trap from the start of a trend – and that's the whole question.
• Stop hunting (stop hunt, liquidity sweep): what Dow Jones futures data says
  Theories and schools · Stops beyond highs do exist, but on Dow Jones futures the market reversed after breaking them just as often as at a random line. Instead of guessing who was hunting, I look at the order flow to see what happened at the level.
• ICT (Inner Circle Trader): Kill Zones, Silver Bullet and OTE Without the Marketing
  Theories and schools · Interesting observations about sessions and stops, but wrapped in a story about a “bank algorithm” that nobody has verified.
• Order Blocks and Fair Value Gaps: What They Really Mean in the Language of Data
  Theories and schools · The names suggest institutional orders, but these are ordinary candles and gaps, with no order data at all.
• Smart Money Concepts (SMC): Old Ideas in New Packaging
  Theories and schools · It talks about institutional orders but “reads” them from candles, usually on forex, where that data simply doesn't exist.
• VSA (Volume Spread Analysis): Reading Volume From Candles and Its Limits
  Theories and schools · The intuition that volume matters is good, but one number per candle doesn't tell you who was buying and who was selling.
• Cup and Handle: A Stock-Market Pattern in an Intraday World
  Patterns · A pattern from daily stock charts that loses its meaning intraday.
• Flags and Pennants: Continuation Patterns in a World That Doesn't Always Continue
  Patterns · Continuation is an assumption, not a rule. Many flags end in a reversal.
• The Quasimodo Pattern (QM): “Over and Under” and Why It's Still Just a Shape
  Patterns · It's head and shoulders in a different order. The shape won't tell me whether anyone was really selling when the structure broke.
• Candlestick Patterns: Hammer, Engulfing, Doji and Stars Under the Microscope of Research
  Patterns · Research shows no edge for them without context, and a single candle is too little information.
• Head and Shoulders: The Most Famous Pattern and the Neckline Problem
  Patterns · It's easy to see after the fact and hard to measure its effectiveness honestly.
• Heikin Ashi: Smoothed Candles That Hide the Real Price
  Patterns · It hides the real price, and I need exact levels.
• Inside Bar and Pin Bar: The Simplest Price Action Setups Under the Microscope
  Patterns · A simple setup without context gives practically random results.
• Rising and Falling Wedges: Patterns That Are Easy to Draw and Hard to Verify
  Patterns · Easy to draw, hard to verify.
• Double Top and Double Bottom: When the Second Test Means Something
  Patterns · A second test only means something in the context of volume and orders, not on its own.
• Triangle Patterns: Symmetrical, Ascending and Descending in Practice
  Patterns · Lines drawn by eye, and breakouts often come back inside.
• The Breakout Strategy: Why Most Breakouts Fail
  Styles, systems and products · Most breakouts come back. Just crossing a level isn't enough.

Only with great caution (17)

• ATR: a volatility measure you mustn't confuse with a direction indicator
  Indicators · Useful for judging volatility and risk, but it says nothing about direction.
• Keltner and Donchian Channels: A Framework for Trends, Not Signals
  Indicators · An honest framework for range and trend, but not a signal.
• OBV and MFI: Simplified Volume – Closer, but Still Not Order Flow
  Indicators · A step in the right direction because they look at volume, but it's a simplification. Delta and the order book give the real picture.
• RSI: How the Indicator Works and Why “Overbought” Isn't a Signal
  Indicators · I have it on my chart only as background on the pace of the move. “Overbought” and “oversold” on their own aren't signals for me.
• SMA and EMA Moving Averages: The Most Popular Tool and Its Limitations
  Indicators · I have them on my chart as background for the trend, but I don't treat moving-average crossovers as signals.
• Bollinger Bands: What They Measure and Why Touching a Band Decides Nothing
  Indicators · A good measure of volatility, but touching a band decides nothing.
• Pivot Points: A Decades-Old Formula Still Watched by Thousands of Traders
  Levels and drawing tools · They work mainly because many traders watch them. For me they're context, not a signal.
• Support and Resistance: Where They Really Come From and How to Tell Them Apart From Lines on a Chart
  Levels and drawing tools · The concept makes sense, but I take my levels from the volume profile and from where trading really happened, not from lines drawn by eye.
• Price Action: Reading Price Alone – and What Price Doesn't Tell You
  Theories and schools · Reading price makes sense, but without volume and order flow it's only half the picture.
• Supply and Demand Zones: Good Intuition, Rough Measurement
  Theories and schools · Good intuition, but a rough measurement. The volume profile does the same thing more precisely.
• Dow Theory: The Foundation of Technical Analysis That Still Makes Sense
  Theories and schools · A foundation with sensible principles, but too general to trade on.
• The Wyckoff Method: Order Flow's Closest Relative Among the Classic Methods
  Theories and schools · The closest to order flow among the classic methods. Today the same questions are better answered with real data.
• Renko Charts: What You Gain and What You Lose by Dropping the Time Axis
  Patterns · I use Renko as a noise filter, but I remember that it loses time and part of the information about the move.
• Day Trading: What Research Says About Who Really Makes Money
  Styles, systems and products · It's my style, but the data is merciless: most people lose, and without a process and risk control it's gambling.
• Prop trading and funded accounts: how the challenges work and how the firms make money
  Styles, systems and products · Firms using this model make most of their money from challenge fees. Read the terms before you pay.
• Scalping: The Shortest Horizon, the Biggest Impact of Costs
  Styles, systems and products · It's possible, but costs and slippage eat most of the edge.
• Swing Trading: A Few Days in a Position, and a Risk You Can't See on the Chart
  Styles, systems and products · Fewer trades, but you add the risk of overnight and weekend gaps.