What an indicator is, and the stacking problem
Understand why adding a fifth indicator makes you worse, not better.
An indicator takes the price series and applies arithmetic to it. A moving average averages. RSI compares the size of up-moves to down-moves. MACD subtracts two averages. None of them add information — they all reduce the same input to something easier to look at.
Key idea
This is the whole lesson: indicators are compressions of price, not new evidence about it. Four indicators derived from the same closing prices agreeing with each other is not four confirmations. It is one observation, counted four times.
That is why the free plan's two-indicator limit is less painful than it sounds, and why screens full of oscillators produce confident wrong calls. The confidence is real; the independence is not.
The only structure worth having
- ▸One trend indicator (a moving average) — tells you the direction you are allowed to trade.
- ▸One volatility measure (ATR) — tells you how far away the stop has to be to not get hit by noise.
- ▸Optional third, from a different data source entirely — volume, open interest, funding, or macro. This one is the only true confirmation, because it is not made of price.
Common mistake
Adding indicators until the chart 'agrees' is the technical version of asking around until someone tells you what you wanted to hear. If you find yourself adding one after a losing trade, that is the tell.
Check yourself
RSI, MACD and Stochastic all turn bullish at once. How many independent pieces of evidence do you have?