The significance behind foreign exchange technical indicators

So here are some questions.

1. In the process of systematizing transactions, is there a need for the meaning behind technical indicators?

2. What is the significance behind technical indicators for systematic trading?

3. How to explore the significance behind trading indicators?

I believe that the significance behind technical indicators should be taken into account when building a trading system. Systematizing the trading process itself requires minimizing the involvement of human factors.

In the process of system construction, if the meaning behind the indicators included in the system is not understood, it is difficult to trust such a trading system based on historical data. In addition, the weight of the indicators in the system cannot be determined.

If this indicator comes from another trading market, we need to understand the significance behind it.

I once heard of one thing (authenticity cannot be tested, but the truth is correct): an economist looked for indicators that were positively correlated with the US stock market, hoping to find technical indicators with a very high degree of fit. Finally, he found that the pig production in a certain place was very correlated with the US stock market, so he used it as an investment strategy. The consequences can be imagined

Therefore, I believe it is necessary to understand the significance behind the indicators when building a trading system. The significance is that we can distinguish the authenticity of the correlation between the indicators and the trading market, which not only enhances our confidence in our own trading system, but also provides a basis for the subsequent optimization of our trading system.

So how can we explore the meaning behind the metrics? My idea is:

1. First, put the indicator to the test in historical data

2. Study the correlation between indicators and the trading market, that is, the internal transmission logic between them. However, I don't think this research should be too far-reaching. Because the human brain is too able to associate, it often thinks of unrelated things together. Because the world is full of uncertainty, the fewer such logical transmission links, the better, and the more intuitive the relationship between indicators and the trading market, the better.

3. After research, establish a trading system with the indicators we deem appropriate and reliable

4. Take your own system to verify it.

Although technical indicators are essential analytical tools, technical indicators do not guarantee that we can make profits. The foreign exchange market is a zero-sum game. If someone makes a profit, someone will lose money. If only technical indicators can be easily profited, if every investor uses trader software, then no one will lose money in the stock market. Is this possible??

Technical indicators first came out of the stock market. The stock market has existed for hundreds of years, and countless foreign industry elites have participated in it, but only common ones such as MA, MACD, KDJ, etc. are still used today. In fact, they are several indicators with relatively simple lines, as the so-called road to simplicity.