Well, I am no authority in technical analysis nor do I have enough experience in trading using technical analysis but I am urged by the love for the art to share my views.
Choosing an indicator, as pointed out well by someone already, depends on a variety of factors and on the individual. Indicators exist in your software/book because they were used profitably by someone, and hence cannot be considered "good" or "bad" as such.
What is important, however, is breaking down of the indicators so as to get a clear picture of their working. For example, a lot of beginners know that a faster moving average above the slower moving average (or moving average below the price) is a bullish sign. Why? Because it makes you wait for a sufficient time (according to your frame) before you exit, instead of exiting prematurely. This part is ignored by most beginners but any analyst would tell you this is what is important.
MACD is another example. It was ,perhaps, introduced to reduce the lag effect of the moving average crossover. Being the difference between 2 moving averages, and the signal line being a moving average of the difference, the signals are quicker than a moving average crossover and yes, one gets more false signals. Again the purpose is to make one wait before hurrying into trade. I could go on further, but I'm sure some of you would have fallen asleep already.
Any good analyst would tell you that a moving average crossover or a macd crossover doesn't mean that the price has to necessarily move up or down.Remember, these indicators are based on price and the price isn't based on these indicators.
Good luck trading.
Oxusmorouz.
Choosing an indicator, as pointed out well by someone already, depends on a variety of factors and on the individual. Indicators exist in your software/book because they were used profitably by someone, and hence cannot be considered "good" or "bad" as such.
What is important, however, is breaking down of the indicators so as to get a clear picture of their working. For example, a lot of beginners know that a faster moving average above the slower moving average (or moving average below the price) is a bullish sign. Why? Because it makes you wait for a sufficient time (according to your frame) before you exit, instead of exiting prematurely. This part is ignored by most beginners but any analyst would tell you this is what is important.
MACD is another example. It was ,perhaps, introduced to reduce the lag effect of the moving average crossover. Being the difference between 2 moving averages, and the signal line being a moving average of the difference, the signals are quicker than a moving average crossover and yes, one gets more false signals. Again the purpose is to make one wait before hurrying into trade. I could go on further, but I'm sure some of you would have fallen asleep already.
Any good analyst would tell you that a moving average crossover or a macd crossover doesn't mean that the price has to necessarily move up or down.Remember, these indicators are based on price and the price isn't based on these indicators.
Good luck trading.
Oxusmorouz.
