A Personal Note from me about that “magic” trading indicator:
Here’s a real story. And from today. About an hour ago, while engaging in one of the trading groups on social media… not one of our groups because you’d never find this there—I came across a message from someone. I’ll keep their identity private because this isn’t about shaming, it’s about educating. The message essentially said: “Good morning, friends. Whoever trades futures, come check out this Futures Indicator that generates tens of percent of profit in every trade. Here’s the trade from this morning with 98% profits.”
This prompted me to write this article to educate our community. Now, I’m guessing that about 80% of you already know this is unrealistic. I’ve even seen comments before suggesting, “If someone is foolish enough to believe this, they deserve to lose money.” But I wholeheartedly disagree. It’s our responsibility, as more experienced traders and investors, to help others—not from a place of arrogance, but genuinely and compassionately.
Think about it: if one day you found yourself misled by such promises, wouldn’t you wonder, “Why didn’t anyone warn me?” That’s exactly why we should help each other.
Sometimes these claims are outright fraud, but not always. Many times, inexperienced traders sincerely believe they’ve discovered something revolutionary. Years ago, I myself worked with programmers, developing an indicator in Python. Our backtests showed amazing results, giving us an incredible adrenaline rush—until the algorithm collapsed in live trading, teaching us an invaluable lesson.
The reality is, consistently achieving extremely high profits or win rates like 98% is practically impossible when you’re trading frequently enough to absorb normal drawdowns. Even in options trading, where selling options might give you a statistical edge and higher win rate, it often takes just one big loss to erase all previous gains.
If someone tells you their algorithm has a 98% win rate, consider this analogy: it’s like me promising I’ll play in the NBA tomorrow, make 98% of my shots, and score at least 49 points. Sure, this might happen in a single extraordinary game, but 98% ‘win rate’ consistently? Practically impossible. And in case that superman was born, having that superman indicator, then they would not sell it to the public, not do a course about it, etc. This is the truth and you better know it. And it goes even further than that – even if one superman Philanthropic angel would do that onde day, then that “magic” indicator would work for a short while before it would stop working, or at least stop performing in such an extraordinary manner. Because the market maker sharks would not let it work for a long time but that is a part of another article. In short, what you need to know is to forget all these unrealistic claims and that consistent trading for the vast vast majority of the few that survive this hard game, isn’t about crazy wins; it’s about consistent, sustainable success over many trades. And it sure ain’t about some BS indicator that promises you to get rich.
Market conditions vary: Bullish phases, bearish phases, trading ranges, and indicators can be deceptively “optimized” or cherry-picked for specific periods. Developers might unintentionally mislead others, mislead themselves, or simply lack the experience to realize their errors. So, always approach such claims with skepticism.
Please take this to heart. Visit investinglive.com for more original insights. We’re growing together, transitioning from forexlive.com to investinglive.com, aiming to help you become not only better forex traders but more informed investors overall.
Thank you,
Itai Levitan, Head of Strategy and Analyst at investingLive.com
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Debunked: Can Trading Indicators Really Deliver “Tens of Percent” Profits Each Trade?
Q: Is it possible to consistently earn tens of percent profits on every futures trade using a special indicator?
A: No. Claims of “tens of percent profit” or “98% profit per trade” contradict fundamental market principles. Reliable, consistent high-percentage returns without corresponding high risks are impossible due to the unbreakable laws of financial markets, specifically the risk-return tradeoff.
Q: What is the risk-return tradeoff, and why does it matter?
A: The risk-return tradeoff means higher potential profits inevitably involve greater risks. Any claim promising substantial profits without significant risks violates this fundamental financial principle. High returns always require proportionally high risks.
Q: Why can’t indicators consistently outperform the market?
A: Financial markets are highly efficient. According to the Efficient Market Hypothesis (EMH), asset prices quickly reflect all available information. Thus, consistent, significant profits from exploiting “market inefficiencies” with simple indicators are improbable, as professional traders and High-Frequency Trading (HFT) firms rapidly close these gaps.
Q: How do probability and risk-reward ratios impact trading profitability?
A: Trading success isn’t about frequent wins alone (win rate) but balancing the win rate with the risk-reward ratio (RRR). Even with a high win rate, poor RRR can still result in net losses. Successful traders often maintain win rates below 60%, ensuring their winning trades significantly outweigh losses.
Claims of extraordinary returns and extremely high win rates like 98% imply a mathematically improbable scenario of near-perfect predictive ability.
Q: What about drawdowns and trade frequency?
A: Drawdowns—periods of losses—are inevitable in trading. Indicators promising constant high profits suggest minimal drawdowns, which contradicts market realities. Additionally, highly profitable setups might occur rarely, such as once every decade, making them impractical due to insufficient trade frequency and limited statistical significance.
Q: Why can’t technical analysis (TA) guarantee consistent, high-profit trades?
A: Technical analysis has inherent limitations, including:
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Subjectivity: Different interpretations cause inconsistent outcomes.
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False signals: Frequent misleading signals generate losses.
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Limited information: Ignoring fundamental and macroeconomic factors leads to missed significant market movements.
Thus, TA-based indicators claiming continual high profitability ignore these critical weaknesses.
Q: Can historical backtesting validate extraordinary profit claims?
A: Historical backtesting can be misleading due to biases such as:
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Overfitting: Strategies overly tailored to historical data often fail in live conditions.
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Survivorship bias: Ignoring failed assets inflates perceived success.
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Look-ahead bias: Using future information creates unrealistic performance results.
Critically evaluating backtest claims for these biases is essential.
Q: What do real-world statistics say about trading profitability?
A: Studies consistently show the majority of traders lose money:
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Approximately 80-95% of day traders incur losses (depending on the reseach).
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Fewer than apx. 10% achieve sustainable profitability after fees.
If indicators genuinely offered guaranteed profits, these statistics would differ drastically.
Q: How do hidden costs affect actual trading profitability?
A: Real trading incurs substantial hidden costs:
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Slippage: Execution at worse-than-expected prices.
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Commissions and spreads: Accumulating fees over many trades.
These costs significantly reduce net profits, particularly in high-frequency trading, potentially turning theoretically profitable strategies into actual losses.
Q: How does psychology impact trading success?
A: Psychological factors significantly influence trader performance, including:
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Fear of Missing Out (FOMO): Leads to impulsive trades based on hype.
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Overconfidence: Results in excessive risk-taking after initial wins.
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Loss aversion: Causes reluctance to accept losses, exacerbating drawdowns.
False promises of easy profits amplify these psychological biases, negatively impacting trader outcomes.
Q: What are realistic expectations for sustainable trading?
A: Sustainable trading involves:
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Accepting that trading outcomes are probabilistic, not guaranteed.
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Focusing on disciplined risk management and consistent execution.
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Setting realistic, achievable goals (e.g., modest monthly returns).
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Recognizing that long-term success stems from consistent gains, not occasional enormous wins.
Traders should avoid “get-rich-quick” mindsets, cultivating a disciplined, realistic approach instead.
So, traders and investors (even in investing anywhere, if you are promised spectacular returns… watch the f** out…). Trading indicators promising extraordinary, risk-free profits are fundamentally misleading. True success requires realistic expectations, disciplined risk management, and thorough understanding of market realities.
Educate yourself thoroughly, we’re at investingLive.com have your back in your education path. Focus on consistent execution, and remember: Sustainable profits arise from patience, discipline, and experience, not magic indicators, special courses, fantastic signals services or some wizard guru, website or app that promise consistent, unrealistic profits. Now you know.
This article was written by Itai Levitan at investinglive.com.