This article aims mainly to help use some tools and techniques more effectively in this manner also increase the likelihood of success in developing its strategy.
On our path to become operators, we are consistent with dilemmas such as: What indicators used? How many times using each indicator? How many indicators used?
There is no single answer to all these questions, each trader is different and therefore each operator is going to feel comfortable operating in different ways. That's why we need to make an extra effort to develop a strategy that fits our personality, risk profile, style of operation, etc..
Sure some of you have gone through experiences similar to this: They are on the Internet with a system that supposedly generates very good performance or results, but when I try to use the results we get is bad or not as good as you mentioned.
This does not mean that the system is bad, but the system was developed by a person to their personal specifications and operating style, risk profile, etc.. This can cause the system not work for us, makes us very difficult to operate and thus do not obtain good results.
Going back then, what indicators to use? Depending on our style of operation, to operate in ranges: stochastic oscillators or for trend, moving averages, indicators of time, and so on. How often used? This is directly related to time you can dedicate to your operation, using intraday transactions in short periods of indicators, for providing longer-term indicators used for long periods. How many indicators to use? Usually, the simpler the better the system. What is certain is that it is better to use several different types of technical tools. Not helpful to use two oscillators, for example because the two are mainly aimed at identifying points of purchase or sale, ie, the two try to tell us exactly the same. When using indicators of different nature which give us much more information. This is because each tells us different market conditions.
In this session we will see some different kinds of technical tools applied to a situation ranges: technical indicators: Stochastic, Supports and resistances and Japanese candles.
What kind of signals and use the indicator?
One of the most important indicators is the Stochastic. This indicator provides us with more accurate signals of over-buying and selling. But how do we use it?
The stochastic shows an over-purchase when the reading reaches a level above 80, on the other hand, indicates a condition of sale when the reading is below 20. When there is an over-purchase
However, this does not mean that the stochastic signal is activated when the reading reaches levels above 80 or below 20. The signals are activated as follows:
Signal to buy: When the reading of the stochastic is in a condition of sale and back to neutral territory.
Sales signal when reading the stochastic is in a condition of purchase and return to neutral territory.
In this plot we see that the signal is activated when the oscillator returns to neutral territory, not when it comes to a condition of purchase or sale.
What is the point where the question marks? We take the signal or not? Obviously not yet active, because the reading of the stochastic is in a condition of purchase. Wait for the market to turn back the signal.
What other technical tools can help us make a decision at this point? The answer to this question leads to the following item:
Support & Resistance
Now see the same chart with incorporating some important levels:
In this plot we can see how we can help support and resistance levels. The EMA (144) always acts as a significant level of resistance. Other resistance levels are: LOPS1 and LOPS2. For purchase helps support level marked.
The idea is to go into a different kind of technical tools to increase the likelihood of success of each of the signs of our strategy. Whenever the indicator to us of a signal to buy or sell and the market is being rejected for a level of support or resistance significant probability of success of our operation increases.
In the place where the question mark, because we have more information, we know that the indicator is in a situation of over-buying and the market is being rejected by a significant level: EMA (144). This gives us a little more confidence about the entry to the retail market
