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My Best Technical Indicators

It should not be a big surprise to my technical trader friends when I tell them about my best technical indicators.
It is not a secret to them anymore but it is to others.  I hope one wants to find out more.  Let's get started.

How I find My Favourite Indicators

Obviously, I have been trying various technical indicators since I started trading.  Like every beginner, I was looking for the holy grail technical indicator

The first indicator that I placed on a chart while day trading was neither the slow stochastic indicator or MACD but the accumulation and distribution indicator.  At that point I did not even know what it really does, but I said: hum! I think that will do and I like it.  And boom, I placed it and began to use it. 

I was trading indices as soon as London opens. You probably know how it works.  As soon as one has two or three losing trades in row, a new search begins for the next best technical indicator.  It is like, it is not my fault, but the technical indicator.  So I was trying one technical indicator after another.  I did not bother to understand what is their ultimate role or how to trade them like a pro. 

I found myself talking to the indicator by saying: come on, come on, come on, you stupid technical indicator.  Have you talked to a technical indicator before?  I bet you did too.  In fact, it was a stupid monologue as one is losing like a donkey.

In those ups and downs, it happened that some days I traded like God and it felt really good.  And the next day, I changed my indicators again because some of them are new to me, and I wanted to try them too.  Then I gave back all my previous gains. 

To cut a long story short, I found my favourite technical indicator while constantly going back to the trading days when I traded like a super being.  Some of those days were without a losing trade.  Surely there were also days without any winning trades. 

While concentrating on what was working for me as a scalping day trader at the step one of the ladder of trading and investing, I spotted a combination of two technical indicators that were always in play when I had my best trading days.  I kept them, but I also began to find out more about them, and most importantly how best I can use them.

Moreover, my willingness was too much. If I look back now I know that I have almost killed myself in the process with many sleepless nights.  Not good, do not try that.

So, that was how I found my two best technical indicators.

Why Is It mportant To Have One or Two Favourite Indicators?

Really, one is using a technical indicator as communication tool.  It helps to communicate with other market players or forces.  

Therefore, one must be fluent in using one or two favourite technical indicators.  One wants to know what is its ultimate purpose; so one does not misuse it.  

One also wants to go one step further than everyone else to find out more about it.  Above all, one must also learn how to use it like a pro at all times.  It is similar to one that is fluent in one mother's tongue, but one can also learn to become fluent in another language in which one is doing business. 

For me a technical indicator is a communication tool.

A market player ought to pay attention to the messages that a technical indicator is sending out to all types of market players on various times frame.  It does not matter if one is trading indices, stocks, commodities or Forex

One that clearly gets the technical indicator's message is the one that will be rewarded.  That is why they call them indicators.  And they always indicate buy, sell, hold and stand by and wait.

A favourite technical indicator is an indicator that one really likes because one has  seen it firing some excellent trading signals, warnings and messages.  One only favours one or two technical indicators that one has mastered.  One can translate, interpret and decipher it.  Right?

One has probably tested it at different times with various financial instruments.  One has also compared it to other technical indicators, and one decided to settle down with one as a woman who finally finds her soulmate.  

Alright you do not want me to go there. You get it.  One should never use a technical indicator that one has not favoured.

My Number One Technical Indicator

My number technical indicator after the naked price-action is MACD.  
There is always a reaction when one says this or that is one's favourite technical indicator.  The reaction in my case will be something along the line:  MACD? I can not believe that MACD is your favourite indicator?  Oh! I hate MACD and so on.  That is normal and fine.  

The correct question to ask after one reveals its best indicator is to ask why.  Why? Yes I heard you.

Well, because MACD in reality is the moving average twelve of the price action place below it with a central line moving average twenty-six called the zero line.  

There are more to MACD and its formula, but I am explaining why it is my best indicator.  So, MACD is a smooth version of the price-action.  It is also a latent version of it therefore it is reflecting the trend and divergences.

I will not bore you with a long explanation, but that is it really.  If you want to know more about why MACD is my number technical indicator after the price-action, please visit Stochastic-macd.com.  You will find more useful web pages.

I do not want to fight the trend.  I want to know when a bullish or bearish divergences are in place.  That is all.  And MACD never let me down, but it is myself that misinterpret it sometimes.  In fact, it has been a long time love affair between MACD and me.  I also like MACD just because it gives so many warnings that one should heed.

My Second Favourite Indicator

It is the slow stochastic indicator.  This is one of the most misused technical indicators.  It was so much that I make it my mission to teach others how to use the slow stochastic like a pro.  I love and master the slow stochastic.

To understand more why I make it my second most love or favourite technical indicator, please check these web pages.

The Ultimate Technical Indicator


The ultimate technical indicator is the price-action.  Naked price-action without any technical indicators.  

It was a dream that came through after I can finally read the price-action without glasses.  If you know what I mean.  That is why I say MACD is my first technical indicator after the price-action.  

The real purpose of using normal technical indicators is to slowly reach a level where one will no more depend on them. Once one  can finally read and understand the price-action alone, one is free from technical indicators.

Does it mean that those technical indicators are irrelevant? 
No.  

They give massages, warnings and signals.  They are useful at giving those warnings before the price's confirmations. However, a warning is a warning, and must be taken seriously.  Therefore, even though I read and interpret the price-action, I still use MACD and stochastic oscillator.

Other Technical Indicators In My Tool Box

I love Moving averages because they are really helpful like MACD indicator.  Truly, I can write a whole book about why moving averages should be mastered.  Surely, many technical indicators could easily be substituted with moving averages.  

Though people are always looking for a magic formula; simple and exponential moving averages do a very good job if one have mastered them.

Apart from the moving averages, there is also the commodity channel index (CCI) oscillator and Relative Strength Index indicator (RSI).

Market players that are on the first step of the ladder of trading and investing spend that time to familiarise themselves with many technical indicators before settling with one or two technical indicators that become their favourites. 

Conclusion

A market player that has no personal best technical indicators can easily become the jack of all trades (master of none).  

Traders and investors become more focused when they finally find their one or two favourite technical indicators.  That is exactly what has happened to me.  Once one finds them, I must now become those technical indicators' expert.  Though MACD is my favourite technical indicator, that does not necessarily mean that MACD will also be your number one technical indicator.

This is the end of this article about my best technical indicators.  I hope one will find it useful.  If that is the case, please share and bookmark it.  I will also appreciate it if you can also say few good words about us in your favourite trading forums.

If you have any questions and comments, please post them at 24stocktrader YouTube channel in the comments, and in due course I will answer them.

I wish you the very best.
Happy Trading To All

This article is written by
George Beaulieu

Founder Of Stochastic-macd.com