Choosing TA indicators is like choosing a mate. What ever turns you on. As long as you only use one indicator from each group and one overlay. To keep you chart basic, simple and clean. The more clutter, the higher your odds for mistakes. That's called multicollinearity. Where you look a multiple indicators from the same group, telling you the same thing. And you are swayed to see strength or weakness where it really isn't.
There are 3 types of TA indicators. Volume, momentum, and trend.
Say your looking for a short, slim, pretty girl and have 5 friend; and 6 blind date girls to choose from. Mary is tall, Joan is short, Jane over weight, Fran is skinny, Rose is pretty and Sue plain looking. Three friends are tall, 1 is fat and 1 ugly. And they suggest a girl for you. You will probably end up with tall Mary. Because 3 told you Mary was best. multicollinearity
Having mutiple indicators from one group can cause errors. Now say you have 20 friends choosing. Chaos
Pick 1 indicator from each group. Keep it basic,simple and clean. Your mother can be the overlay. LOL but that is the main thing I would like to stress about picking favorite TA indicators.
Indicators
Now we get to, should you wear your glasses on the date? Some TA indicators magnify the picture. I use DMI over MACD and stochRSI over RSI and CMF over accu/dist, because they present a clearer picture for short term, swing trades. But I'd choose MACD, RSI and accu/dist for longer term, position trading. Because they tend to allow you to see history projected in their graph. And history repeats. Kind of a beauty vs.personality thing. Are you looking for a quicky or a wife thing.
Overlays
And you mother becomes the on who chooses your overlay. If she wants you married she will pick long term moving averages 50,100,200 day. If she doesn't want the girl to take you away from her, she will pick the 5,10,20 day. Here comes good old mister stability, correct your mistakes dad. Always wanting steady as you go and move on when things call for it. He would pick something like Bollinger Bands or Parabolic SAR as an overlay. Trying to keep you on the right path. More then make the right decisions your mom feels best.
So there you have it. It really doesn't matter who's advice you take, as long as the advice meets your timing needs and doesn't become cluttered with noise. Try them all, pick what fits your style the best. But keep it basic, simple and clean.
AI
