Loading
Market Intelligence › Basic Terminologies
Every indicator is built from price alone — what that means
Published by The Retail Trader · AUG 08, 2026 · Indicators
Every indicator is built from a single input: price. It transforms that price. So it cannot know anything ahead of price, however advanced its name sounds.
Most indicators take an average, and building an average needs older data. So their signal always arrives a little after the move.
To reduce lag, the period is shortened, but that increases false signals. This is a trade-off that cannot be removed, only chosen.
Optimisation often looks like improvement and is not:
• Finding the best settings on past data is often just memorising that data.
• Tuning more than two parameters is the fastest road to overfitting.
• Most people use the default settings, so they have an effect of their own.
• A setting that worked only on one stock and one period is not a strategy.
Putting on two indicators that measure the same thing gives no confirmation — they are saying the same thing twice. More than three indicators on one chart are almost always different forms of the same information.
This article is for education only — it is not a buy or sell recommendation, makes no claim of guaranteed returns, and is not advisory. Rules, rates and mechanics change from time to time with the exchange, SEBI and RBI, so verify every number yourself with your broker or an official source.