Hello,is it perfectly ok to use these indicators on trending currencies (or stocks),without any problems?
In a certain book on stock trading i read that these indicators should be used for when stocks are in trading ranges (non trending),where as macd,moving averages are trending indicators & should be used as such?
I think i’m reading too much into this though,but am hoping that some kind soul can confirm this with an explanation.
Cheers all.
I am under the belief that those indicators can be used in any market, be it trending or ranging. It is really up to how you use the indicators to trade. It’s all subjective.
You can use the standard indicators on all time frames and all instruments…
It is important that you define exactly how you plan to use each indicator and that you backtest thoroughly so that you know what you might expect…
If you do not develop a trading plan and backtest and improve it… you can be certain that you will be donating your account to the brokers benevolent fund…
There are many tools and systems… the one that is important is your written trading and money management plan… without those two you may as well just give away the funds you plan to have in your account.
Hello,thanks for the replys.I was mainly thinking of them with use as an overbought or oversold indicator in trending markets,as described in the school of pipsology,but just wondered if they sometimes give false readings with a trending currency?
Cheers.
Definitely they can give a misleading reading…
I am attaching a chart of the Dow Industrials showing two RSI and one Stochastic… you will see that the stoch, in particular has been over bot for several days while the price keeps on climbing…
Therefore you have to use price action to base your decision on… the indicator gives a false impression. ‘Overbought’ is not a good word to describe the over 70 or over 80 reading. Often the ‘overbought’ area indicates that the market is starting to pick up steam…
Be super cautious using indicators to read the market… price bars and candles tell the truth…
