Many beginner traders tend to get sidetracked when they encounter technical indicators—these tools seem to accurately point out when to buy and when to sell, clear and straightforward, saving them the trouble of analyzing market conditions.

But one thing must be clarified first: all technical indicators are calculated based on historical price data, and they are inherently lagging. This is unavoidable. However, lagging does not mean useless. The value of indicators lies in helping traders quickly understand the current market pulse—how big the price movements are, whether the trend is strong enough, whether the market is overheated (overbought) or oversold (oversold). Instead of blindly guessing among a bunch of data, indicators can save you a lot of effort.

Here is a core rule to remember: no trading strategy should rely 100% on indicators. The true role of indicators is to "secondarily confirm your judgment"; they are auxiliary tools, not the sole basis for trading signals. Seeing an indicator flash a green light and rushing in is gambling, not trading.

**1. Fibonacci Retracement Levels**

Strictly speaking, it is not a traditional indicator, but many trading experts consider it an essential tool. Its core principle comes from the Fibonacci sequence—1, 1, 2, 3, 5, 8, 13… each number is the sum of the two preceding ones. Dividing adjacent numbers repeatedly yields the magic number 0.618, known as the "Golden Ratio."

In practice, the most commonly used level is 61.8%, mainly to predict retracement levels during upward or downward trends. Combined with the 38.2% and 50% key levels, it can identify important support and resistance zones in the market. Don’t worry about the precision of the numbers; treat these levels as a reference framework to find price points where rebounds or breakouts are likely.