How do you figure out whether to freakin’ use oscillators, or trend following indicators, or both? After all, we know they don't always work in tandem.
This is probably the most challenging part about technical analysis. And why I call it the million dollar question.
We will provide the million dollar answer in a future lesson.
For now, just know that once you're able to identify the type of market you are trading in, you will then know which indicators will give accurate signals, and which ones are worthless at that time.
This is no piece of cake. But it's a skill you will slowly improve upon as your experience grows.
Summary
- There are two types of indicators: leading and lagging.
- A leading indicator gives a buy signal before the new trend or reversal occurs.
- A lagging indicator gives a signal after the trend has started
- Technical indicators into one of two categories: Oscillators and trend following or momentum indicators.
- Oscillators are leading indicators.
- Momentum indicators are lagging indicators.
- If you're able to identify the type of market you are trading in, you will then know which indicators will give accurate signals, and which ones are worthless at that time.
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September 18, 2016 at 2:52 PM