Now that you know how the most common graphic indicators work, here are some practical examples.
It is even better to combine some of these indicators and see how their trading signals are issued.
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Ideally, we can consider just one of these indicators and trade exactly what this indicator tells us.
But we do not live in an ideal world, and each of these indicators has its own shortcomings.
This is why many traders combine different indicators so that each can “screen” each other.
They may have 3 different indicators and will not trade until all 3 indicators give them the same signal.
Bollinger Bands + Stochastic
In this first example, we have the Bollinger Bands and the Stochastic Bands on the 4-hour EUR / USD chart.
Because the market appears to be suffering or moving horizontally, it is best to watch out for the Bollinger Bands reaction or leap.
How to combine several indicators in trading
Examine the sell signals of the Bollinger Bands and the Stochastic Bands.
EUR / USD has climbed to the top of the band, which usually acts as a resistance level.
At the same time, Stochastic has reached the overbought zone, meaning that prices may soon fall.
And then what happened?
EUR / USD has dropped about 300 pips so that if you make a small sale you will make a good profit.
Later, the price has hit a low bandwidth, which usually acts as a support level.
This means that the currency pair can return from there. Stochastic’s presence in the overselling area means we have to shop.
If you got it, you would make about 400 pips! not bad!
RSI + MACD
Here is another example, this time using RSI and MACD.
How to combine several indicators in trading
When the RSI reaches the overbought zone and sells the signal, it is not long before the MACD follows the downtrend, which is also a sell signal. And as you can see, the price went down.
One hand in honor of multiple indicators!
Later, the RSI pushed to the oversold area and sent a buy signal. A few hours later, the MACD made an uptrend, which is also a buy signal.
From there, the price has had a steady rise. Which means that the pips are piled up in our favor! Hooray.
With this example, you have probably noticed that the RSI signals before the MACD.
Conclusion :
Due to various features and magical formulas for technical indicators, some of them give really early signals, while others have a little delay.
As you continue your training journey as a trader, you will learn which indicators work best.
We can tell you that we personally like to use MACD, Stochastic and RSI, but your tastes may be different.
Every trader has tried to find the “magic combination” of indicators that gives them the right signals, but the truth is that there is no such thing.
Our request is that you study each indicator on your own until you know how it behaves in relation to the price movement, and then the combination that you reached and associated with and that fits your trading style, for Create your own.
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