Trading without complex indicators: Simple profitable strategy

​It’s really not that difficult to create a simple, consistently profitable trading strategy. In fact, it’s so easy that I’m going to do that very thing right here and now. 

I’m going to create:

• a swing trading strategy that uses just one single technical indicator
• that offers the opportunity for substantial profit, while avoiding potentially catastrophic losses
• that can be employed year-round (in other words, it’s not seasonally dependent)
• that offers the opportunity to profit from trading both long (bull market) and short (bear market) positions in the market
• that is very easy to use, with crystal-clear buy and sell signals
• that requires only minimal monitoring

I’m doing this simply to point out that we traders (and yes, I'm as guilty of this as anyone else) often needlessly overcomplicate our trading in search of “the Holy Grail” of trading strategies. We want to come up with that perfect strategy – the one that never suffers losses and never leaves a dollar of potential profit on the table. Of course, such a “Holy Grail” strategy doesn’t actually exist. But we drive ourselves crazy trying to come up with it – layering ever more complex indicators one on top of the other, till we get to the point where we can hardly even decipher our own price charts, because they’re so full of the lines and objects we’ve drawn all over them.

The whole time that we’re driving ourselves to an early grave from constantly being over-stressed…we could be making money relatively easily, with a lot less work and worry.

Creating a profitable trading strategy in less than five minutes

I’m going to create our simple trading strategy by using simple trial and error – try one indicator, see how it works. If it doesn’t seem to work, then try another one.

Okay, the first technical indicator that I decided to try was the 10-day exponential moving average.

It didn’t work.

The second indicator I tried was the MACD (Moving Average Convergence Divergence). I first tried trading using the MACD histogram. That gave rather mixed results – and some rather muddy, unclear signals as well. So, I decided to try using the MACD blue signal line instead.

The MACD blue line worked like a charm! – as I’m going to show you in a series of screenshots of the daily chart of IBM stock (NYSE: IBM) throughout the whole of 2025.

(Note: Of course, part of trading is deciding what you want to trade. I selected IBM stock based on fairly simple principles. I wanted to trade - 

- a solid company, one that reasonably offered reasonable profit potential

- as a risk-control measure, I wanted to avoid trading highly volatile stocks such as Tesla or Nvidia, where I could be subject to massive overnight losses, or just being whipsawed back and forth a lot and, thereby, seeing much of my potential profit erode.)

Let’s recap our progress thus far, which has been accomplished in just a few minutes time:

- Selected a financial asset to trade

- Settled on a single technical indicator that appears to work very well

The simple (single technical indicator) profitable trading strategy

Here’s a quick and easy rundown on our quick and easy trading strategy:

I’m trading off the daily chart.

I’m using the MACD blue line as my sole buy/sell indicator. Here’s our very, very simple trading strategy:

1) Buy (close out any previously existing short sell trade, and buy long) whenever the MACD blue line crosses from below to above the zero-line shown in the MACD indicator window

2) Sell (close any open buy trade, and open a new trade selling short) whenever the MACD blue line crosses from above to below the MACD zero-line

Thus, this is a swing trading strategy - one designed to keep us in the market at all times, looking to profit from price movement to the upside or the downside. We’re not looking to try to nail exact highs or lows in the market, but rather just to capture some of the profit potential that’s unveiled by any price action that carries the stock price significantly higher or lower.

Three buy trades, two sell trades – 50% profit

All right, I’ve got pictures – three in total - of the daily chart that take us all the way from January through December, 2025, so that we can review IBM’s price action and see how well our trading strategy performed.

I’m going to assume that we start out by purchasing just 10 shares of IBM stock – a modest investment - when we make our first trade according to the dictates of our new trading strategy, on January 23rd, 2025. At that time, IBM was trading at about $225 per share, so our – 

Initial investment = $2,250.00

I’m going to add one little trading strategy extra to (hopefully) help us grow our investment a bit more and more quickly than would otherwise have been the case. Each time (after our initial 10-share purchase) that we make a new buy trade – as long as our overall trade position remains profitable – we’ll buy five additional shares of IBM. Thus, our second buy trade will give us 15 shares rather than 10…and so on. I’ll calculate profits or losses accordingly, including our increased investment and position size in the market.

I’ve circled each market entry/exit point on the charts, in the MACD window – in other words, circling every zero-line crossover that triggers a buy or sell trade for us.

Daily chart, January to May, 2025

(trading signals generated detailed below)

Trade #1: Buy 10 shares @ $225 Thursday January 23

Total equity = $2,250

Trade #2: Close out 10-share buy and sell short 10 shares @$244 Thursday March 20

Total equity = $2,440

Trade #3: Close short sell of 10 shares and buy long 15 shares @ $245 Monday May 5

Total equity = $3,665 ($3,675 - $10 loss on Trade #2)

Daily chart, May to September

Trade #4: Close 15 share buy and sell 15 shares short @ $261 Thursday July 24 (note that this trade was profitable even though our exit occurred after a $20 overnight price drop)

Total equity = $3,915

Trade #5: Close short position and buy 20 shares long @ $257 Wednesday September 10

Total equity = $5,200

Daily chart, September to December

Trade #6: Close out long buy position of 20 shares of IBM on December 31, 2025 @ $299

Total year end equity (not including dividends) = $5,980

Simple trading strategy review

Well, it looks like our simple trading strategy did, indeed, turn out to be a simple, profitable trading strategy. Let’s review how we did.

Initial investment/starting equity – 10 shares = $2,250

Additional investment – 5 shares @ $245 = $1,225

Additional investment – 5 shares @ $257 = $1,285

Total investment = $4,760

Total ending equity = $5,980

Total profit = $1,220 (approximately a 25% ROI on the total investment; approximately a 50% ROI on the initial investment)

And that’s not even including dividends! Our one and only loss was just $10.

Now, could that trading strategy be refined to perform even better? No doubt - yes, it could.

But that’s not the point. My point here is simply that, within the space of just a few minutes, I was able to craft a nicely profitable trading strategy, using only a single technical indicator – one that generated, with just a handful of trades, approximately a 50% return on our initial investment of just $2,250.

We traders, ever seeking that elusive “perfect” trading strategy, often make trading more complicated (and often less profitable) than it needs to be. Recall to mind that legendary traders such as Jesse Livermore made huge fortunes working with nothing more than a ticker tape and stock prices scribbled on a chalkboard – no computers, no gigabytes of data, no complex technical indicators.

Therefore, my humble suggestion to take from this little trading experiment is just this:

Consider simplifying, rather than complicating, your approach to trading. You just might find that you’re able to make more money with less work. Just a thought.