| Trading Indicators: Too Much Is Not A Good Thing |
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| Written by George Priestley |
| Tuesday, 02 November 2010 20:44 |
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There are actually masses of technical signals out there and thousands of technical signals combos that may be used. But the difficulty lies on the grounds. Since there are many technical signals available at your disposal, you risk yourself of having way too much of everything which can lead you with getting a grip on nothing. This ignores the question : "are you able to use too many technical indicators?"
There are actually masses of technical signals out there and thousands of technical signals combos that may be used. But the difficulty lies on the grounds. Since there are many technical signals available at your disposal, you risk yourself of having way too much of everything which can lead you with getting a grip on nothing. This ignores the question : "are you able to use too many technical indicators?" Probably, you have asked the same question too and are trying to find the Holy Grail of combinations that will catapult you to immortality, at least in the trading world. You may test several technical indicators or technical indicators combinations that are suggested by some writings on the internet. But the thing is, there is no single technical indicator combination that is 100% successful. Because if there is, everyone will be using it and everyone will be rich right now. Right? I am not saying, however, that the internet cannot give you something you can use or the internet is just a virtual world full of crap in terms of information about trading indicators. We cannot deny that the internet has given us the ease of access on several technical indicators and charts, which have made some investors knowledgeable in the field and have actually make others real fortune. What I am saying is that investors should not rely on suggested technical indicator combinations and expect to become successful. What you should do is to learn as much as you can and identify which indicators are suited to your trading style, which in turn, can yield to higher profit or positive curve in the long run. While acknowledging that, you do not need to use one or two signals immediately. Professionals agree on this. Using a couple of signals at a time will only create puzzlement. It'll only create confused claims, which isn't good if you would like to have certainty in your call. A good example is using 7 indicators when deciding on your entry and exit positions. Four of them are telling you to enter a long position but 3 are indicating a future downward movement. While majority of your indicators are giving a green light, the other 3 can become a factor. Statistics may be on your side to pursue the trade but you are more likely to abandon it because you still see the risks. It doesn't end there. Using multiple time frames can offer you different confused claims which can become an important element in your call. Rather more likely, you finish up not trading at all as you are scared to take a position. To become successful, you really do not have to have several indicators. This is quite ironic but the most effective indicators are those that have been around the longest. Experts suggest that you stay away from complex set-ups and stick on the basic like MACD (Moving Average Convergence/Divergence), Rate of Change (ROC), Relative Strength Index (RSI), Price and Volume Oscillator, and stochastics. Even with these examples, you have got to identify which signals are suited to your trading style. Don't overcomplicate things. To find success, you do not have to constantly audition new signals so as to find the best combo. All that you need to do is to utilise and master few and simple ones. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn more about canadian penny stocks. Stop by Author Name"s site where you can find out all about dow jones futures and what it can do for you. |