This is an important tip to share with you all, in particular those new to trading and that is about Oscillators.
Many see the titles, the claims, this is overbought, this is oversold, this is a death cross or bull cross, this market is going to crash or we are going to the moon. The truth about Oscillators is that they follow price, what does this mean, this means in hindsight they look like they effect the market on a technical chart, however in reality you are seeing a technical illusion. In reality a market can remain oversold ( a term referring to a oscillator at a low point ) for long periods of time or over bought ( a term referring to an oscillator at a high point ) for long periods of time.
If any value for a trader was derived from these indicators it would be that at least they stop a trader from hopefully buying at potential highs or selling at potential lows on a particular market. Other than that though in my opinion they are distractions as a trader or investor should already know to potentially buy at lows or potentially sell at highs just by looking at the price action and chart alone.
The big problem I see is that some influential people claim Oscillators have some type of directional impact on the market, psychologically yes they can have a small impact, however is it a big impact, no, they are just following price as I said earlier, if price keeps rising that market will remain overbought until sellers start moving the market lower again or vice versa.
What I suggest people do instead is focus on structure areas, in particular important structure areas in the market and risk to reward, master those two things with investing and trading and your trading and profitability will improve very quickly, it is okay to optionally include some oscillators ( stochastic, moving average, RSI, etc ) if you want however just be aware they follow price and often they will turn much later after a potential low risk in relation to reward trade is potentially confirmed in a structure area on the chart.
In summary using an Oscillator as an extra confluence for a positive reward to risk trade is okay, however always use it as an extra confluence only to confirm a potential setup rather than a major reason to buy or sell a particular market alone.
