As a beginner which indicators are best to start with for trading longer time frames???
I use EMA’s to confirm trend but no off-chart indicators.
Many people successfully use RSI or MACD or stochastic oscillator to confirm e.g. if a pull-back is sufficiently significant to be worth taking a position anticipating resumption of trend. But its should be one or another not all three.
I have seen traders using 5 or 6 indicators sometimes to confirm their prediction as to whether price was going to go up or down, most often at times of reversal or break-out, but I see two problems with that. If you do use e.g. 3 indicators, how will you decide what to do when 1 is bullish, but the other 2 are neutral? An indicator should only be used to tell you something you don’t already know.
Secondly, indicators tend to increase focus on entry pattern. They can even be used (abused?) to indicate entry timing. Its dangerous to over-focus on entry set-up, when trend forces are always more powerful and in any case, its the stop that protects your money and exit that pays the bills.
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Beginners should concentrate on chart pattern and news analysis instead of indicator based trading!
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If new traders are interested on trading indicators, then they need to analysis on default only! I have enough doubt on additional technical tools!
It’s not clear what you mean.
But if you meant to imply that beginners using indicators should stick to the default settings sometimes programmed into their trading platforms, I totally disagree and I think that as so often you’re giving awful advice.
There are two things to be aware of, in that context:-
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Those are the settings their counterparties (the “brokers” who supply the platform, who hold the other sides of their trades) want them to use, because they know traders are very likely to lose, that way.
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When you’re setting out to make money from something from which very, very few people make money, “going with the crowd” or “going with the default” is obviously extremely unlikely to be a successful approach.
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BB (Bollinger Bands) is the best one to start with, Disclaimer: it works on an only rangy market!
Why don’t you say what you mean? So what would be the ideal settings for, say, MACD? Or RSI?
When you say going with the crowd is unlikely to be successful, what do you mean traders should do in order to be successful?
[quote=“tommor, post:7, topic:111760”]
Why don’t you say what you mean? So what would be the ideal settings for, say, MACD? Or RSI?[/quote]
I don’t know who you’re asking (it wasn’t me who mentioned MACD or RSI) but in case you’re asking me, my suggestions are:-
For MACD: use it as a bias indicator only, on very high settings, for example 30-45-25 or even 40-60-30, to bias you in favor of identifying potential long entries from price action only when the MACD line is above the signal line and both are rising, and in favor of identifying potential short entries from price action only when the MACD line is below the signal line and both are falling.
The advantage of using it this way is that it’s effectively representing a longer time-frame within the time-frame from which you’re trading, without any multiple screen complications, and giving you a good perspective of “longer term trend”.
However you look at it, the standard 12-26-9 settings (which I think LauChoKun was recommending, at least in principle) have nothing to do with trading spot forex on any time-frame at all - they’re just a historical left-over from the days of trading stocks on daily charts with a 6-day week (the “12” was the number of trading days in 2 weeks and.the “26” was the number of trading days in a calendar month of 4.3 weeks). Hardly a surprise that those aren’t appropriate at all.
For RSI, personally I’d recommend using it only for “RSI divergence”, and a setting around 20 or 22 periods can be quite useful for that: anything much lower and you get loads of false signals; anything much higher and the thing almost never fires at all.
But this doesn’t matter much. My main point was that LauChoKun’s advice was horribly inappropriate and unhelpful, for both the reasons I explained in my post above.
More education before trying to practice.
The idea involved in learning as you go along, especially by looking at what other forum members are doing, and using standard indicators in standard ways, makes it terribly difficult for people to succeed.
This is probably among the reasons why so many people fail?
If you look at how institutions are training graduate entry-level people to trade their money, I think you find something that’s actually not nearly as difficult as people imagine to try to copy yourself. It’s a whole different approach from what you see people talking about in forums, surely, but I think far more likely to be successful.
Apologies if I wasn’t the person you’re asking, Tommor.
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This is such a good post. Many thanks.
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When I was a newbie, continued with Bollinger Bands, it’s not bad for the beginners but I didn’t gets maximal result that I got in my demo account.
I meant default trading indicators like Moving Average; RSI, BB etc; not default sittings, thank you!
For trading longer time frames for BEGINNERS,
Simple moving averages 200 on smaller time frames?
Simple moving averages 50 on smaller time frames?
Ichimoku indicatorSSSSS on bigger time frames?
Maybe…
Yes - maybe very helpful advice, there.