Indicator Settings Are Not Important

Every time a trader mentions a trading system, the first question that is asked is what the indicator settings are. Typical questions include what input data the moving averages are based upon (e.g. average price, closing price, etc.), what length the stochastics are using (i.e. how many bars), or any number of similar questions. These questions are asked because most traders believe that the indicator settings are necessary for trading the system correctly, however, they are actually one of the least important pieces of information.

The indicator settings that are used by a particular trading system can (and should) vary from one trader to another. For example, more agressive traders will want to use shorter lengths so that their trading signals are displayed earlier, while more conservative traders will want to use longer lengths so that their trading signals are displayed later. Modifying a trading system's indicator settings does not change the underlying trading system, so they can be changed to suit different trading styles and different markets (or even different times of day). A decent trading system can be traded successfully regardless of the indicator settings (within reason), so trying every possible combination of indicator settings to find the perfect one, is not going to make you a better trader.

Professional traders rarely ask what the indicator settings are for a trading system, because they know that there are more important aspects of the trading system. The next time that you are finding out about a new trading system (and this includes the trading systems detailed on the day trading site), try focusing on the behavior of the trading system, and its interaction with market dynamics, rather than the specific indicator settings that are used in any examples.