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In this video, we look at the top 5 technical indicators successful spread betters create their trading strategies from. We look at what the indicators mean and how they should be applied to the markets. We look at real-world examples as to how the signals and indications can lead to profitable trades.
This video is best for:
Traders looking for profitable technical indicators.
Traders wanting to learn how to use technical indicators.
Traders wanting to see examples of how to use indicators to identify trades.
Beginners looking for an understanding of how to use technical analysis.
-Most common mistakes with technical indicators
-Types of indicators
-Indicator 1: RSI
-Indicator 2: MACD
-Indicator 3: Bollinger band
-Indicator 4: Supertrend indicator
-Indicator 5: Indicator confluence
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Welcome to the top five indicators of profitable trading.By the end of this video you have a good understanding of how people use technical indicators a trade with example to provide. Technical indicators can be very daunting for beginner traders, though have to be and by then does video you have an understanding of the most common technical indicators and how they can be used to support your trading. Firstly all the indicators are going to show you are created from basic candlestick data. The auto information from the open high low and close the basic price action. If you need to learn more about the basics candlesticks and please click here three-part candlestick series.
Here are some of the most common mistakes traders make the technical indicators. Don’t overload your screen with indicators and display the indicators that you actually use on your charts a lot of traders overload their charts with indicators as excuse to over trade.Remember indicators are just an indication of something happening in the market they are crystal ball trying to predict the future. Don’t blame the indicators where traders and workout no matter what indicators you use your still have to take losses in trading.
Two types of indicators. There are two types of markets trending and range bound or cyber to markets. A trending market looks like this but the market is moving in one direction arrange panel Cyprus market looks like this were the market is moving up and down within a specific range indicators tend to be either suited trending or range assignment markets.
Indicator one RSI. The relative strength index compares the magnitude of recent gains to recent losses in the attempt to determine overbought and oversold conditions of instrument as you can see from the chart the RSI ranges from 0 to 100. Insurance is deemed to be overbought once the RSI approaches the 70 level mean that it maybe getting overvalued and is a good candidate for pullback likewise if the RSI approaches 30, then the instrument is oversold and therefore like to reverse. Traders will often use the RSI coming back out of overbought or oversold conditions as a signal to enter the market.
A trade using RSI should be whether large rallies and drops in price will affect the RSI by potentially creating false buy or sell signals traders often come by the RSI such as the MACD.
Indicator two MACD. Moving average convergence divergences is one of the most well-known unused indicates in technical analysis this indicator is made of two exponential moving averages which help measure momentum henchmen. These moving averages and the changing distances between them become the MACD. Convergence means the moving averages moving closer together, divergence means they’re moving away from one another.
Indicator three Bollinger bands. A Bollinger band starts off as a simple moving average and has two standard deviations plotted away from it that sounds a mouthful but the important part is because standard deviation is a measure of volatility Bollinger bands adjust themselves to current market conditions. When markets become more volatile markets widen and move further away. Enjoying less volatile periods the band’s contract moving closer together. The typing of the bands of news by technical traders as an indication there may be volatility to follow.
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Technical analysis for trading
I just learned these indicators to use on my own I picked up information from different videos. People have no clue how valuable this information is. I use Bollinger Bands macd volume and candlesticks. After watching this rsi will be added. Much appreciated and a great video.
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I did not argue that what you are contending. A pro trader can work at home, at an investment bank, hedge fund etc. Sure the pro trader may use a number of methodologies at the different places or even in one place. However at no place does he trigger a trade based on lagging indicators.
When the pit traders went to form the pit to the electronic market , what made the core of algo trading, just what did they use to program the algo trading? Something new ? Or something they used for 50 yrs in the pit? Yes, they used traditional pivots. Yes I know more has been added now but the core remains. How does a person know that? Well because the price reacts at these pivots. ie gbp/usd in the middle of Brexit these 2 weeks.
Yes I have done a couple internships at 2 different institutions using multiple methodologies, none of which included lagging indicators, even as chart art.
That is all I have to say. Best of luck to all. Happy Holidays!
They're not semantics, they represent vastly different approach to market speculation. For example, 'traders' at investment banks aren't going to care much about any TA as they're primarily going to be spending their hours monitoring algorithms. A retail trader may be very interested in TA (or not).
The rest of what you're saying is coming down to methodology. Unless you have access to how all consistently profitable professionals makes their trading decisions (which you obviously don't), you can't say what they will or will not do for certain.
You seem to be believe your options and world view is factual and applies to all.
+Trade Room Plus A pro trader can be in a retail, a hedge fund setting or any other setting. These are just semantics.
I didn't say that is all they use. Clearly they are fundamentally and technically knowledgeable. But they tend to limit the trade trigger into just trading a level in a given background. There is no time for multiple indicators coming to a consensus which rarely happens.
Eg. Does a pro wait for a candlestick pattern to be formed or macd or stoch to cross at support and then take the trade? NO. He already has entered the trade ...possibly a few candles earlier. So what accounts for that decision? Well clearly he is trading the level .... be it a price support and/ or market support, which is called a pivot.
Professional traders - I assume we're talking about professional retail rather than institutional - use a range of different methodologies. To suggest they only use X and don't use Y is incorrect. There are many ways to get an edge, the key is the execution of one's strategy and a solid trading psychology.
This video gives the technical explanation of these Indicators accurately, unfortunately, what he explained will not help you as a Trader. Can any of you say honestly you understand any of this? Let me put in layman's terms. RSI is a basic Overbought, Oversold Indicator. But what you must know, is just because a Commodity is Overbought doesn't mean its ready to turn and fall. Conversely, when Oversold the same applies. You need to use this Indicator with other Indicators. Stand alone its not useful. MACD. The main use of this indicator is that it will
give you a precursor of what's ahead. When the MACD crosses over say from a Buy to a Sell, it can happen days ahead of when the Commodity actually makes the move downward, but it warns you in advance of what is coming. This is an important Indicator and one you need in your tool box. As far as Market Direction. All you need to monitor is the Exponential Moving Average (EMA) and the Simple Moving Average (SMA) . The two will clearly show you Market direction.
Bollinger Bands are another very important Indicator. Bollinger Bands will give you the Daily Price outcome . Monthly Bands overrule Daily Bands and are the deciding factor for Price
outcome. You won't get that info from any Technical Analyst, but it is so. Also, when the Bands Diverge, and this applies to long or short, as long as they are in this posture, Price will continue moving in that direction until they no longer Diverge. This is a valuable fact for knowing how long to stay in a trade or bail. Two other important Indicators are Williams % and the ADX. I'm going to get into them, but you need to study and find out how they work. They are essential for profitable trades. This is valuable information, take it to heart.
+Trade Room Plus Thank you. I am extremely passionate about this subject. Have been Trading since 2005 and always looking to review and improve my knowledge. I purchased Trading information early on as a novice, and even though it was technically accurate, it wasn't practical in its application. I had to learn the nuances to
each indicator by monitoring trades on daily basis. School of hard knocks. This video took me back to those early days, and hence, my response. Thanks for
your reply and understanding.
Im restricted to buying one day and selling only the next day in robin hood. My idea is to buy at new lows I wonder if a system can work with me on that. Im waiting on 2.5 k to reach Fidelity in-so I can expand my experience.
Most people fail due to an incorrect mindset / flawed trading psychology you say, (but what has that got to do with unknown infinitesimal variations of decisions plus associated economy fluctuation that in accumulation decide where the price will go momentarily, after all, your analogy and my observation are not in any way predictably connected because its to complexed.
Youtube can automatically archive live video for free and you only need to do 15-20 hours so as to show true results and it does not take any longer or take more effort.
My request is not a trick but a genuine interest to see into someones claims.
Im not going to go na na ne na na told you, when you loose trades, for gooness sake, he he.
Hello T R P
Where can I see the archives of the live sessions please which will be fine.
Do most fail as you say because strategies are inconsistent thus profits must be inconsistent, not a trick question as I am genuinely interested and preparing a case study on peoples beliefs and ways of trading.
Hi I need TRS indicator (time remaining spread) show indicator
TRS indicator feature: (This indicator will tell you how much time is remaining before the current candle closes)
How can i download this indicator please help me : )
Over the years, I came to the exact same model by trial and error, except that, instead of RSI, I use the RSI Stochastic or plain Stochastic indicator to time the exact point of entry and exit.
The other thing is, the BEST time for signal generation is not when MACD peaks or bottoms, but when the second peak/bottom of MACD forms a divergence.
In general, divergence between indicator and actual price provides the most optimal signal for entry/exit.
This is all crap. Rsi can be good because nearly every trader uses it so is kind of like a self fulfilling prophecy. Other than that, price action is the only thing to look at. Indicators tell you nothing that you can't see in price action alone
Steve G Obviously, you have not taken the time to understand the proper use of the array of Indicators at your disposal, so therefore as many do, they put down the implementation of Indicators when in truth, they don't know enough about them. This is a good Video as they have chosen a few basic fundamental Indicators but there are more to them than explained. In my view, RSI is not that important although informative; basically Oversold / Overbought.
But, just because a Commodity is Overbought doesn't mean it will falter and fall. It can get as high as 80 or 90 and keep going. Depends on the strength of the rally. It needs to be used in concert with other indicators. I use MACD as a precursor of what's to come. This indicator leads out in front of the others, so when the rally weakens, you'll see it first on the MACD, it will begin to fall and do so days in advance even as the rally moves forward signally a possible change is ahead. Bollinger Bands, ah, this is the daddy of them all.
Bollinger Bands display the days outcome of Price; every trading day! When Price is in the Upper Band domain (above the Mid Point), the Upper Band determines the Days outcome. Conversely, same outcome in the Lower Band. As the Upper Band Rises, Price rises as well. Conversely, when it falls, Price falls with it. Lower Band, when it falls, Prices falls and when it rises, Price rises. When both Bands rise, Price rises. When both Bands fall, Price falls. This is what every Trader lives for. When the Bands Diverge, if Price is in the Upper domain, Price will rise as long as the Bands diverge. Conversely, the same applies. Knowing this, the Trader can be assured the rally will be intact until a change is seen in one of the Bands. When that happens, be on your p's and q"s for a possible change.
Another major Indicator not mentioned is Williams %R, or W%. This indicator works in reverse. Optimum value -0%, Bottom -100. I've termed them -0 / -10 Penthouse and -90 / -100 Cellar. When a Commodity falters after a big rally, keep an eye on W%. If Price falls quickly but W% remains above the 50% mark and holds steady, usually in the -30' or -20's, look for the Commodity to rebound. If W% falls quickly with Price and moves past the 50% mark and gets in the -70's -80's rapidly, then a major change in the trend is at hand.
Last one. ADX. This indicator confirms the Major Trend. I've taken up enough space here, you'll have to do your homework on this one but it is extremely effective.
Thanks for the opportunity to inform Steve that there is much more to Indicators than many Traders are aware of and not be so quick to judge.
Then you have not fully understood the increasing power and precision that higher order statistical measures provide us.
The reason you are mentioning stops while using price action is because price action can be very choppy and you can get whipsawed quite frequently.
Higher order stats indicators tend to smooth out this choppiness as well as provide final tops/bottoms among a series of tops/bottoms.
Unless you learn to figure out these, you will continue to confuse lack of understanding on your part with uselessness of statistics and remain at the lower end of technical sophistication.
I am sure you will eventually loss all your money if you only trade by using the indicators such as RSI, MACD, Bollinger band, and so on... without understand the structure of waves, fibonacci ratios, risk and reward management, price reaction, and all the patterns. Good luck, man.
Its really not that difficult, certainly not as difficult as "experts" want you to think it is. Its a basic game of probabilities. As long as you set a Stop-Loss order at 1% below the Entry Price and set a Sell Limit Order at 2% above the Entry Price you will make a lot of money. Assuming you back-test the indicators you are using and that backtest has a 40%-50% success rate you are going to enormously profitable. People have been using this strategy for decades to build very respectable fortunes in the market.
It depends how the indicator is setup and what market you're trading. For example, a sideways market like EUR/GBP can benefit from stochastics to help identify areas of interest to trade the sideways price action.
From experience, all of those indicators are crap. It's still a 50/50, and it seems like it's even worse odds when you go live. I've studied every single indicator in the Ninjatrader platform, which includes all of these. I have done multiple tests with multiple time frames, multiple settings, etc, using every single instrument. I did this for a couple of years. NONE of these indicators work! I'm telling you, DO NOT be sucked into these lies. Overbought, oversold, big moves, little moves............... You can look at ANY chart long term. Sometimes the indicators gave a good signal. Then you keep going forward & you'll see a bunch of times when they didn't work. You can look at one time frame & it'll give a buy signal... then switch to another time frame & it might give a sell signal. There is NO WAY to predict where the market will move! You will lose more often than you will win & you will be frustrated.
It's interesting you write, 'from experience'. Our experiences shape our beliefs. Someone who has had positive experiences with TA will come to the opposite conclusion.
My view is that a combination of TA and discretionary judgement about the specific market the trader knows well is best way to trade.
Lets not forget that the reason the graph moves in its manic way, is because what causes its movement is always changing and its impossible to know the amount of causes between any forex time line points. If a person wants to choose a trade period then that person would have to know the exact underline reasons and then calculate their affect on their trading in and out points which is impossible. Traders are starting and stopping trades whilst game is in play. The information in the graph is purely cosmetic like writing down and studying the numbers from a game of roulette.
The point is 17% of people manage to successfully work from the graph / TA. They are defined by the FCA as 'consistently profitable' which means they are consistently making more than they lose over time. Brokers are going to have to produce data on profitable / losing clients soon (the US already has to) so that'll give you insight.
This will help you to understand logic so here we go. Playing the forex is nothing to do with candle sticks and the rest of that nonsense. To win on the forex, you have to catch a run on the graph, and to do that successfully for your trade period, you would have to know all the exact combinations of influences of the graph journey for your trade period, which is impossible to do because they are infinitesimal.
One of the best and most straightforward technical indicators videos I have seen! Thank you very much for sharing this with us. I have one question if you don't mind me asking. In your opinion, do you think RSI is more effective and accurate than Stochastic or using either of the two would be fine? I mainly trade 4h and daily charts and I have tried to compare both on MT4 and still trying to figure out which will be have a more effective buy/sell signals. Another factor is setting. Some recommend the 80/20 over 70/30 approach on RSI which is believed to show more reliable signals. What are your thoughts on the differences of these two tools and their settings. Thank you!
I use Stochastic (and even the RSI Stochastic) because it provides crossover signals.
But the following rule could give you equally good precision in both indicators. Use the rising bottoms/declining tops continuations to point out that the trend continues to be on (especially above the 70/80 and below the 30/30 demarcations).
When this trend reverses (rising bottoms/tops fails and declining tops/bottoms start, for instance), the change from rising to falling or vice versa, along with divergence between indicator and price will point you to an accurate top/bottom in the actual price.
Thank you for this excellent video. How would you use the MACD and RSI to guess at which price it will go into the overbought or oversold state for putting sales/buy orders down? Because the graph is not linked to the prices/decimals, or does 30 mean it's 30% under the average of the current price? I hope you get my question.. no idea how else to explain myself haha.
The overbought and oversold conditions are relative to the previous price action. If the preceding periods are flat / not volatile it would mean it does't take much movement to put the market in overbought / oversold conditions so this needs to be considered. You'd most likely combine the RSI coming out of overbought / oversold with the MACD crossing either itself or the middle line. The settings would depend on the specific market being traded. Hope this answers you. Come to our next free training session: https://attendee.gotowebinar.com/register/2671114349110269441
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