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Chapter 12, Part VIII. Indicators: Tightening All Together.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Jul 7, 2011.

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  1. Administrator

    Administrator Just Administrator :-)

    Sep 24, 2007
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    Part VIII. Indicators: Tightening All Together. [​IMG]
    Commander in Pips: Since we’ve studied some different indicators. Let’s take a look how they could be applied in combination with each other. The point is that, as we’ve previously said, every tool could fail sometime. So, to get some insurance with any signal – it’s better if the same signal comes from different indicators and we do nothing till some indicators will confirm each other. This is the major principle of combinations of different indicators.

    Pipruit: Yes, this is always interesting, but Commander, may be we should use all of them. In this case we will get very confident signal…​

    Commander in Pips: …Or no signal at all. First, the “best” is an enemy of the “good”. Second, we want to make trades and not just watch how one indicator cancels out another. We do not want to analyze spaghetti charts with 20+ indicators so that we even will not able to see the price itself. Catch up some simple rules:

    1. Always keep charts as clearer as possible. So, that you clear see the swings, thrusts and the reality of price action;

    2. Use different tools separately. For instance, if you want to take a look at Fib support/resistance levels – do this, estimate the crucial levels, mark them and erase the others that you will not need during the nearest trading session. D not combine them with Bollinger Bands, Moving averages and other tools simultaneously, so that your chart will become extra heavy. To think clearly you should have clear vision of price action;

    3. Do not use more than three indicators simultaneously. For example – check the trend with MACD or MA. You may keep it on chart. If you want to look at Overbought/Oversold - plot DOSC or Momentum or Bollinger Bands, take a look and delete them from the chart. Keep it clear.

    4. When you’ve taken a look at the overall picture – keep only significant details on the chart – in other words only crucial results of your analysis with text markings.

    5. In general you will need just two indicators - one is for trend identification and another one for overbought/oversold estimation. May be you will use additionally the ADX indicator for trend power tool. Personally, I like MACD as a trend indicator and DOSC as overbought/oversold indicator. But during your trading journey you will estimate which indicators are preferable personally for you.

    6. So, more is less here.
    #1 Administrator, Jul 7, 2011
    Lasted edited by : Mar 24, 2016
    Hamza Samiullah and fran alvarez like this.
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