Best Combination of Technical Indicators - Stochastic Oscillator, Moving Averages, RSI and MACD Indicators
Best combination of technical indicators Tutorial - Stochastic Oscillator, Moving Averages, RSI and MACD
Stochastic Oscillator technical indicator can be combined with other technical indicators to form a Forex system - Buy Sell Signal Indicator MetaTrader 4 Indicators. For our example we will combine it with:
- RSI
- MACD
- Moving Averages FX Trading Technical Indicator
Example 1:
Sell Forex Signal - Best Combination of Technical Indicators
From our Forex trading system the sell forex trade signal is generated when:
- Both Moving Averages are moving down
- RSI indicator is below 50
- Stochastic moving downward
- MACD indicator heading downward below center-line
Sell signal was generated when all these forex trading rules were met. The exit forex signal is generated when a signal in the opposite direction is generated i.e. When the technical indicators reverse.
The good thing about using such a trading system is that we are using different types of indicators to confirm forex trade signals & avoid as many whipsaws as possible in the process.
- Stochastic - is a momentum oscillator
- RSI - is a momentum oscillator
- Moving Averages Technical Indicator- is a forex trend following indicator
- MACD- is a trend following indicator
It is very useful to combine more than one trading indicator, as a combination of forex signals is better than relying on just a single indicator. The indicator combinations reinforce each other, and cancel out false whipsaw fake out signals.
A trend following technical indicator helps a trader to see the overall picture, while using more than one momentum technical indicator gives better & more reliable entry and exit points for trading.
Best combination of technical indicators and their forex trading signals help to interpret a lot of the market activity.
Example 2:
Buy Forex Signal - Best Combination of Technical Indicators in Forex Trading
For this example the forex trend is clearly upwards, but at some point there were a few whipsaws generated by the stochastic oscillator technical indicator, can you spot them? - So the question is how can a trader avoid trading these forex whipsaws?
Well, the answer is that by looking at the other technical technical indicators such as MACD a trader could have avoided the whipsaw, even the MACD technical indicator had not given a forex cross over signal although it was very close to zero centerline level, at the same time gradient at which the moving averages turned was not so sharp as to signal a decisive forex trend reversal. The thing is that it's not so obvious when it comes to recognizing whipsaws: it is a skill that takes some time but after some time you can spot whipsaws after some practice.
One tip is that as long as MACD indicator is above zero center-line even if the MACD lines are heading downwards then the trend is still upwards. As you can see from the above example MACD indicator never went below zero line and afterwards the upward trend continued with the MACD indicator maintaining above Zero line and continuing to move upwards.
During ranging sideways forex market trends Stochastic Oscillator will give the fastest trading signals which are prone to whipsaws. This is why stochastic oscillator indicator is best combined with other indicators and signals traded are confirmed by other one or two other Forex indicators to form - Best Combination of Technical Indicators - Top 10 MetaTrader 4 Indicators - Combination of Indicators for Forex Trading.
