Too many technical indicators. Info overload

So I have been studying technical indicators like a good little boy, however the problem is I'm now getting information overload and seeing that there are just too many indicators out there. If I was to put the indicators I learnt into a graph it would look a complete mess and I would conflicting messages.

My question is as a newbie what are the most important indicators that I should know and use. I realise that you might use different technical indicators for different things but I'm talking about it in general terms what are the most important.

Most indicators tell you what's already happened not what's going to happen.

I would suggest that you start by plotting Support and Resistance on daily charts. With practice these levels will jump out at you as soon as you look at charts. S/R and price with give you a strong foundation for you to build your trading strategy.

forefit said:

So I have been studying technical indicators like a good little boy, however the problem is I'm now getting information overload and seeing that there are just too many indicators out there. If I was to put the indicators I learnt into a graph it would look a complete mess and I would conflicting messages.

My question is as a newbie what are the most important indicators that I should know and use. I realise that you might use different technical indicators for different things but I'm talking about it in general terms what are the most important.

Click to expand...

At max, put 3 indicators on your chart otherwise it will get messy.
1/ Maybe a couple of MAs and 1 oscillator.
2/ ...or maybe just use 1 oscillator in conjunction with SR
3/ No oscillators but use price, SR, and MAs
4/ Nothing at all and just use SR

But stick with one way and learn it well. Any system with massive amounts of indicators is just overkill and very likely to give conflicting signals.

I kind of realise that if put on too many indiicators it just won't work, I'm just trying to figure which indicators I need to use and which ones I don't need. Should I start looking at someone blog and see what they are using and see if it suits me?? or should I develop something that suits me?

Hi forefit,
I would suggest that you ask the question 'what is it that you want an indicator to tell you that you can't easily deduce from price - as displayed on a chart or a time and sales window?' If you can answer that question, then members can suggest an indicator or two that might do the job you want it to. For example, if you said you wanted an indicator that tracked the volatility of an instrument which would be an aid to working out position size and stop placement - I would recommend plotting the Average True Range (ATR). Keep in mind though, that indicators are a bit like drugs or alcohol, unless they are used with care and in moderation, they can create way more problems than they solve.

The only other answer to your question (which doesn't really answer it at all), is to suggest the indicators most commonly used by most traders. I would guess that it's the 10, 50 and 200 period simple moving averages. Additionally volume, but that's only because it's loaded as standard on many charting packages; very few traders appear to use it in any meaningful way.
Tim.

I suppose I just want to know what are the basic indicators that someone who is new to trading and learning about technical analysis should really concentrating on.

My problem is I know a little bit about a lot of indicators but it means I haven't been able to concentrate a particular indicator and gain a better understanding of it.

forefit said:

I suppose I just want to know what are the basic indicators that someone who is new to trading and learning about technical analysis should really concentrating on.

My problem is I know a little bit about a lot of indicators but it means I haven't been able to concentrate a particular indicator and gain a better understanding of it.

Click to expand...

Hi forefit,
There are no indicators that a beginner (or anyone else for that matter) 'should' be concentrating on. I'd be extremely surprised if any experienced traders told you otherwise. In fact, many of them would advise against using any indicators at all. To say the least, indicators are not at all fashionable at the moment!

Further to my earlier post, the best indicators for you are the ones that tell you what you want to know that you can't (easily) tell from price alone. And what you want to know will likely be different to the next person. Why is that? Well, imagine you use an indicator that triggers a long trade. The person you buy from may use another indicator that indicates price is unlikely to rise any higher - or that it's likely to fall. So, until you work out what you want the indicator to indicate, you'll forever be going round in circles. I might be wrong (and, I hope I am) but, reading between the lines, I rather suspect the question you really want answering is 'which indicators work best so I can make a consistent profit?' The answer to that is that there are none. If there were, everyone would use that particular indicator(s) and not bother with all the rest.

If all the above seems unhelpful or confusing, an alternative route would be to look at other traders and see which indicators they utilise and why. That might give you some ideas and help to narrow down your search. Try looking in the [Best Threads] forum Stickies. Here's one to get you started:
BBmac's Gbpusd thread
Enjoy!
Tim.

"I rather suspect the question you really want answering is 'which indicators work best so I can make a consistent profit?'

Isn't that why we all come on here and ask questions? the ultimate goal of everyone here is to make consistent profits

Hi..

i suggest suport and resistance indicators that related Fibanachi and Trends..
which i have been used since my starting point..

Thanks..

forefit said:

So I have been studying technical indicators like a good little boy, however the problem is I'm now getting information overload and seeing that there are just too many indicators out there. If I was to put the indicators I learnt into a graph it would look a complete mess and I would conflicting messages.

My question is as a newbie what are the most important indicators that I should know and use. I realise that you might use different technical indicators for different things but I'm talking about it in general terms what are the most important.

Click to expand...

I think it depends on what you are trading personally. If you are day trading forex then no indicators are the recommendation from 95% of people on this site as indicators are more useful when they have more data to create them, so intra-day they give many more false signals. Draw support and resistance lines and use moving averages. Keep it clean and focus on the price action.

If you are swing trading forex on a daily time frame then I've seen a good trader using the above plus RSI to help gauge risk reward of an entry point.

I personally trade stocks on a longer term basis and think that volume is a key component when trading stocks. I use indicators as a secondary measure only for additional confirmation of price action, but I don't look at them on the same chart. Of those I use Elder's Force index (which shows volume in a more meaningful way) on a cumulative basis with a moving average to create infrequent signals. I look at this mostly on a weekly or monthly chart as the signals generated are rare, sometimes only once or twice a year, but it shows when volume is moving into or out of a stock.

So in summary:
Forex: focus on price action, S/R lines
Stocks: focus on price action, S/R lines and consider volume accumulation.

That's my two cents on the subject.

Ok, I have kinda got the idea that really depends now on what you are trading, and what your trading style is as to what indicators you should use. I suppose my next question now is what books would recommend for just technical analysis?

what are you planning on trading? how do you plan on trading it? THERE IS NO indicator, which will 'MAKE YOU $' ... indicators will only offer you data and confirm or refute what you are thinking or feeling about the price action.

So if you cant articulate what information you are looking for I am sure somebody can give you direction as to whcih indicators they use ... let me know if this helps - b

forefit said:

. . . I suppose my next question now is what books would recommend for just technical analysis?

Click to expand...

forefit,
'ere you go . . .
Which Books should a Beginner Read?
For books specifically on TA, see the section headed 'Trading & Technical Analysis' in post #2.
Tim.

stick with 1 or 2 purely mathematical indicators and learn them well and apply the more subjective support and resistance and you should be ok

currently i use mostly chart patterns and support resistance to enter trades although i have an EMA as i find it clearly shows a trend (i don't trade ema crosses) i've got an ADX and MACD and ICHI MOKU i just keep an eye on them to see how they perform relative to my patterns

still learning and i think this is the best way to start

i have 2 books i read before trading

Schwager on futures, Technical analysisby jack schwager

and technical analysis, the complete resource for financial market technicians by charles d kirkpatrick and julie r dahlquist

schwager has a very subjective pattern based view and explains things as such while kirkpatrick et al take a more rigorous academic line based on mathematics

both of these were a great starting point, yea they cost me $350 all up but that's a lot less than the amount i would've lost going into the markets with no knowledge (or just internet based guidance)

textbooks are definitely the way to go to start learning trading especially if you're just out of university or in the middle of university

ohhh thanks timsk, that has just hit the spot.