Best Combination of Indicators - Stochastic Oscillator, Moving Averages, RSI & MACD Indicators
Best combination of indicators PDF - Stochastic Oscillator, Moving Averages, RSI & MACD
Stochastic Oscillator indicator can be combined with other indicators to form a Forex system - Buy Sell Signal Indicator Meta Trader 4 Technical Indicators. For our examples we will combine it with:
- RSI
- MACD
- MAs Indicator
Example 1:
Sell Signal - Best Combination of Indicators
From our system the sell signal is generated when:
- Both Moving Averages are moving down
- RSI indicator is below 50
- Stochastic moving downward
- MACD indicator heading downwards below centerline
The sell signal was generated when all these fx rules were met. The exit forex signal is generated when a signal in opposite trend direction is generated i.e. When the technical indicators reverse.
Good thing about using such a trading system is that we are using various types of indicators to confirm trade signals & avoid as many whipsaws as possible in the process.
- Stochastic - is a momentum oscillator
- RSI- is a momentum oscillator
- MAs Forex Indicator- is a trend following indicator
- MACD- is a trend following indicator
It's very useful to combine more than one fx indicator, as a combination of signals is better than relying on just one single forex indicator. The forex technical indicator combinations reinforce each other, and cancel out false whip saw fake out trading signals.
A trend following indicator helps a trader to see the overall picture, while using more than one momentum indicator gives better & more reliable entry and exit points for trading.
Best combination of technical indicators and their signals help to interpret a lot of market activity.
Example 2:
Buy Signal - Best Combination of Indicators in Forex Trading
For this example the forex trend is clearly upward, but at some point there were a few whipsaw fakeouts generated by the stochastic oscillator, can you identify them? - So the question is how can a trader avoid trading these forex whipsaws?
Well, the answer is that by checking-on the other technical indicators such as MACD a trader could have avoided the whip saw, even the MACD indicator had not given a forex cross-over signal although it was very close to the 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 fake outs: it is a skill that takes some time but after some time you can spot whipsaw fakeouts after some practice.
One tip is that as long as MACD indicator is above zero center-line even if MACD lines are moving downwards then the trend is still upward. As you can see from the above example MACD never went below zero line and afterwards the upwards trend continued with the MACD maintaining above Zero line and continuing to move upwards.
Duringranging sideways forex market trends Stochastic Oscillator Indicator will give the fastest signals which are prone to whipsaws. This is why stochastic oscillator is best combined with other indicators and signals traded are confirmed by other one or two other indicators to form - Best Combination of Indicators - Top 10 MT4 Indicators - Combination of Indicators for Forex Trading.
