Trading Indicators: Too Much Is Not A Good Thing
There are literally hundreds of technical indicators out there and thousands of technical indicators combinations that can be used. But the problem lies on the premise. Since there are lots of technical indicators available at your disposal, you risk yourself of having too much of everything which can lead you with mastering nothing. This begs the question: "can you 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 really not pronouncing nevertheless, the net can't give you something you may use or the web is simply a virtual world full of crap re info about dealing indicators. We won't reject the web has given us the simplicity of access on a few technical indicators and charts, which have made some backers informed in the field and have really make others real fortune. What I say is that speculators shouldn't depend on advised technical indicator mixtures and expect to achieve success. What you need to do is to learn as much as you can and identify which signals are suited to your trading style, which in turn, can yield to higher profit or positive curve over time.
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.
An excellent example is using seven signals when deciding on your exit and entry positions. Four of them are letting you know to enter a long position but three are indicating a future downward movement. While majority of your signals are giving a green light, the other three can become an element. Statistical data could be on your side to follow the trade but you are much more likely to desert it as you still see the risks .
It does not end there. Using multiple time frames can give you different conflicting information which can become a major factor in your decision. More likely, you end up not trading at all because you are afraid to take a position.
To gain success, you actually don't need to have several signals. This is kind of ironic but the best signals are those which have been round the longest. Mavens suggest that you steer clear of complicated set-ups and stick on the basic like MACD ( Moving Average Convergence / Deviation ), Rate of Change ( ROC ), Relative Strength Index ( RSI ), Price and Volume Oscillator, and stochastics.
Even with these examples, you've got to identify which signals are suited to your trading style. Don't overcomplicate things. To find success, you do not have to consistently audition new signals to find the best combo. All that you need to do is by using and master few and straightforward ones.
Article Source: FxTradingStock.com
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by: David Spenser
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Word Count: 558
Date: Tue, 8 Feb 2011
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