Combining all three types of Technical Indicators for High Odds Trading!

Posted on February 19, 2012
You should now have a pretty good understanding of what the different types of Technical Indicators tell you. Now we look at how traders can combine these Technical Indicators to increase their odds of success trading the financial markets.

What is important to know is that too many indicators can confuse the trader. That is why we often recommend using maximum two Technical Indicators from each category. Furthermore we recommend that the trader does not choose two Technical indicators that pretty much show the same, such as Relative Strength Index (RSI) and Stochastic. the three types of technical indicators Think of trading as a Top Down Approach. The trader should use Lagging Indicators to identify the right market conditions to trade. After that the trader should use Leading Indicators to try to get into the trade as fast as possible giving the trader the highest Risk-Reward scenario. Lastly the trader should use Confirming Indicators to see that the move is confirmed. If not then the move might end abruptly.

Do not just throw a bunch of Technical Indicators together and hope they will work together. Make sure you understand what they are telling you and choose the Technical Indicators that complement and not supplement. As always, remember to trade using a simulator whenever you test out new Technical Indicators. It always takes time to get to know new Technical Indicators. This ends the series of lesson on what are Technical Indicators