This quick 2-minute read will save you from making one of the biggest mistakes for new traders that results in confusion, poor results, and eventually failure if not corrected. The following information will not only shed light on this problem but provide you with the solution as well.
A top problem new traders have in their technical analysis is that they pair indicators up that fall in the same category. For example, they will pair RSI up with Stoch RSI or pair RSI up with TDI, which all are in the relative strength category of indicators. Pairing these indicators up with each other creates friction in signals because they all essentially do the same thing, measuring oscillations in buying and selling pressure.
Major indicator categories
Leading vs Lagging Indicators
Volume Indicators are leading or lagging tallying up trades and quantifying whether bulls or bears are in control
Trend indicators are lagging indicators that analyze whether a market is moving up, down, or sideways.
Mean reversion indicators are lagging and measure how far a price swing will stretch before a counter impulse triggers a retracement.
Relative strength indicators are leading and measure oscillations in buying and selling pressure.
Momentum indicators are leading and evaluate the speed of price change over time
The solution… you want to pair indicators up from different categories to make sure you aren’t measuring the same thing in your technical analysis. Focusing on using just a couple of indicators from different categories will help provide consistency and mastery in your trading.
In the NewWave system, we can teach you how we use a single indicator paired up with 3 other components to provide a very effective and reliable trading system. I invite you to join our free in-depth training on the exact components we pair together to create this effective and powerful system here: https://www.tradethewave.com/registernow