I mean it when I say that. While plastic silverware is fine for picnics and parties, it is totally inappropriate in a surgeon's hand with an open brain in front of him. Not only are plastic forks built incorrectly to perform delicate surgery, their cheap construction may actually cause further injury to the patient. I don't know about you, but I sure wouldn't want someone prodding around inside my head with one of those things!

Ok, I'm joking. The truth of the matter is that you already knew that plastic forks were not meant to be used for brain surgery. It was obvious. In fact, it was so obvious that it seemed silly when I told it to you.

You might have even laughed.

But what if I told you that - right now - you are doing almost the exact same thing as a surgeon operating with a plastic fork? Something just as inappropriate and just as harmful from a financial point of view. I'm not joking any more. Let me tell you what I mean.

Your current charting software probably has a bunch of technical indicators built into it. Moving averages, RSI, Stochastics. There are hundreds of them. Thousands of traders rely on these tools every day to help them make investment decisions. (And thousands of traders blow out their accounts each day, too.) What these traders probably don't realize is that if those tools were people, they would be dead by now.

Yes, those indicators are old. In fact they're dinosaurs. They were invented in the days before computers even existed. Even before calculators were around! They were designed to be calculated by hand, using simple formulas and daily closing prices. Add some numbers up and divide by something else. Any elementary school student can easily calculate any of those indicators in only a few short minutes. We're talking kindergarten math here.

With today's trading computers running at Gigahertz speeds, don't you think that it's time traders started using some more advanced formulas in their trading? There's no reason to keep things so simple anymore. We've got the speed and the power to calculate anything we could possibly ever want to, so why are all these charting programs stuck with the caveman tools?

Take a look at the chart shown above. This is an example of some of the things that computers can do today that would have been impossible for the traders of yesterday.

First turn your attention to the blue and red dots above and below the price bars. These Exhaustion Bars are based on price patterns that appear at important turning points in the market. They appear in real time, not in the past. You see, Exhaustion Bars are based on price patterns that appear at important turning points in the market. The computer studies the data, and a dot pops up on the screen when a pattern match is found. They do not get overloaded like RSI or Percent R in strong trends, and work in all markets and on all time frames.

Next look at the blue moving average. The name is about the only thing that this indicator shares in common with the moving averages of the past. It is smoother and more responsive than the classical moving average because it is adaptive. It actually measures its own error and uses that to recalibrate itself each bar. In other words, it learns from its mistakes. Hard to calculate, but the results blow every other moving average away.

Finally, take a look at the red oscillator at the bottom of the chart. Using a modified Lomb Periodogram, this indicator will tell you exactly where you are in relationship to the dominant market cycle. So look to sell when the indicator is topping out, and look to buy when it's bottoming.

The thing that this last indicator can do that no other classical overbought/oversold measurement can is that it can tell you when it's confused. See that green histogram in the background? When that is high, the software is saying, "I don't know what's going on! Don't take this measurement too seriously." Now that is valuable information! Quite simply, it keeps you out of the losing trades.

If you had to calculate any of these tools by hand like they did in the old days, you'd be up half the night. And that's if you didn't make any mistakes! But with modern computers and software, all it takes it a click of the mouse and the results of these incredibly complex formulas are displayed instantly.

Here's another chart:

See all those little 9's on the chart? That is the output of the 9-5 Count, an amazing algorithm that can find the termination points of price cycles. Note that I said price cycles, not time cycles. The concept is new, and I've only heard one other person (a very successful trader) ever discuss anything like this.

There are 3 main aspects to the 9-5 count, and to keep things clear only one is shown here. To use the indicator, just buy near blue 9's and sell near red ones. Those numbers mark the end of the current price cycle, and the beginning of the next. Pretty simple for us, but the formula takes up over 10 pages of computer code.

Even more surprising than the length of the code is the fact that this formula works on everything. Not only futures prices either. I'm talking about daily temperature fluctuations and spectral readings of the sun. If you can put the data into bar chart format, this cycle will show up. I don't care whether you're charting pork bellies or toad populations. I've never seen a bar chart that didn't run on the 9-5 Count.

Now look at the pink line at the bottom of the chart. This is the Ultra Smooth Momentum indicator. It is just as responsive as classical momentum, but all of the noise has been eliminated using modern filtering techniques. This means you can use it to find divergences without getting faked out every other bar!

A divergence signal is when the momentum curve starts making higher highs or lower lows and price moves in the opposite direction. This divergence between price and momentum usually resolves itself in the direction of momentum, so keeping an eye out for divergences is very important. I've marked three of them on the chart with red lines. They were easy to find without all the noise.

The fact of the matter is that popular technical analysis has really not kept up with the speed of technology. But that's changing now. There are tools out there that can wipe the floor with any old style indicator. The 9-5 Count is one of them. I'd take it over the hundred or so indicators offered in those popular charting packages any day. One scalpel is worth 1000 plastic forks.

So if you're trading with RSI, Stochastics, or any of the old style indicators, it's really time to consider upgrading your tool kit. Remember, if you're not using these tools in your own trading, someone out there is using them against you. Trading is a zero-sum game, which means that all profits made are taken directly from some other trader. You don't want to be on the wrong end of the stick!

If you do any day trading at all, you owe it to yourself to learn more about what Wave59 can do for you. I'm so convinced that you'll love what you see that I'll give you one month for free just to try things out. No contracts to sign, nothing to lock you in. Just sign up and download the software. If you don't like the program after a month, cancel your account and owe me nothing. It's really that easy to get started. But get ready to throw your old indicators in the garbage - you'll never want to go back. I guarantee it.

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