⚖️ Trading Indicators Tier List – The Brutally Honest Breakdown

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Video Transcript:

This is the trading indicator steel list, the brutally honest breakdown. So if you’ve ever wondered which indicators actually work and which ones are complete garbage, this video will save you years of frustration. I’ve been trading for 16 years now, and I spent way too much time chasing a holy grail. That means testing everything, combining everything, tweaking settings, you name it. And today I can tell you exactly what works, what doesn’t, and why. We will look at classic indicators that everyone uses, and I’ll also throw in a few professional tools to see how they compare. So let’s get started.

Let’s start with RSI. RSI is supposed to show overbought and oversold zones, but in real trading it just falls apart. In trends, it’s a total disaster. In rotation, it is hit or miss at best. RSI sounds good on paper, but on real charts it’s basically a random signal generator and goes straight into tier D. Next one will be EMA, exponential moving average. EMA can help a bit in a clear trend, especially if you trade pullbacks in that trend. But that’s about it. In rotation, it gets chopped to pieces because it reacts to every tiny wiggle. It is better than RSI, so it’ll go into tier C, but it is still a very basic and very context-blind indicator.

Now this brings me to the SMA, simple moving average. SMA is basically the slower version of EMA. The same idea, just lagging more. In practice they behave almost the same, and that’s why I’ll put it in the same tier. Next is MACD. In essence, MACD is just moving averages stacked on top of each other, and yes, it reacts exactly like that painfully late. In a clear trend, it will at least point you in the right direction, but most of the time it signals long when an uptrend is ending and short when a downtrend is ending. It just can’t keep up, so that’s why it goes straight into the D tier.

Another popular indicator is Stochastics. Stochastics is the opposite of MACD because it’s way too fast. If there’s a trend, then every tiny wiggle or tiny pullback triggers a fake reversal signal. And in rotation, you barely get any signal at all. I really don’t know why it’s so popular. For me, it is clearly a D-tier indicator with absolutely no value. Coming up next is the Bollinger Bands. Bollinger Bands at least make some logical sense because they are a moving average plus standard deviation. When the market is rotating, they signal reversals pretty well, but once a trend kicks in, they get ignored and they give you lots of failed reversal signals. So Bollinger Bands is not a terrible indicator, but very environment dependent, and I’ll put it into the C tier.

Next one is Fair Value Gap. Fair value gaps mark spots where the market moved quickly or aggressively, and those zones really do get some reactions. They are easy to spot and great as points of interest. On their own, they are a bit too simple, but if you combine them with something solid like, for example, Volume Profile, then they become quite useful, and that’s why I’ll put them into the B tier.

Now let’s talk about the VWAP. VWAP is basically a smarter moving average because it includes volume. It shows fair value much better than any classic average. It works in trends, works in rotations, and even institutional algos pay attention to the VWAP. In my opinion, it’s quite reliable and definitely a level above regular moving averages, and it will go into the B tier.

Now we get to the real professional tools, starting with Order Flow. Order Flow shows real executed orders no guessing, no delays. It is amazing for intraday traders because you actually see when the bigger players step in and where the real fight is happening. It’s a ton of information, but once you handle that, it’s extremely powerful, and that’s why I’ll put it into the A tier.

Here comes Volume Profile. Volume Profile shows exactly where the big players traded clear levels, strong reactions, consistent results. It’s quite easy to read and way more reliable than all the average-based indicators we covered before. Along with Order Flow, this is the most effective tool you can use, and it will go into the A tier.

Now the last one is Volume at Time, or sometimes it’s called Up and Down Volume. That’s the classic volume. This one shows when volume spiked and by that I mean in which candle the volume spiked. Sometimes it is useful, but a lot of the spikes are just obvious news or session times. So compared to Volume Profile, it’s simply weaker and the information is not as useful. For that reason, it will go into the C tier.

Now you might be wondering, why is the S tier still empty? Well, it’s simple. None of these indicators are correct 100% of the time. There’s only one thing that’s always right, and that’s my wife or your wife and they go straight into the S tier. So the S tier is taken. But if you want to get your hands on the A-tier indicators, you can find them on my website. It is traderdale.com. Click Trading Course and Tools, and it will take you to the page where you can get my trading education and custom-made A-tier indicators.

I hope you liked the video. I’ll be looking forward to seeing you next time. And until then, happy trading.