The vast majority of investors in the market rely on the cues of technical indicators to conduct transactions,such as the most commonly used MACD,RSI,KDJ,and other technical indicators in the market.However,when using these indicators,sometimes they just don't work.This is because there is often a lag in buy and sell signals,or the signals fail,ultimately leading to trading losses.
So,how can traders improve the effectiveness of technical indicators for buying and selling and increase the accuracy probability?
1.Understand how trading indicators work
Before determining that an indicator can provide a reliable market interpretation,it is necessary for traders to understand the origin of the indicator.The elements that make up all technical indicators are essentially the same.They are derived from a combination of transaction prices,time,and trading volume that has already occurred.
This means that,strictly speaking,indicators are "lagging" because they are based on what has already happened.
No matter what has happened,looking forward,anything can happen.In a trading method with clear discipline,the analysis method of trading indicators is an important part.All traders cannot escape emotional issues.Sometimes the market is largely dominated by market sentiment.And trader behavior is a compound of many types of biased thinking,so it is difficult to quantify.Understanding how trading indicators operate is undoubtedly helpful for traders to better comprehend the significance of the signals these indicators provide.
2.Increase the time for waiting for indicator signal confirmation
A good technical indicator signal will recognize signs that the market is showing a certain pattern (such as a trend reversal),but many times it is difficult to provide traders with a good entry opportunity.
One of the issues with many technical indicators is that they issue good signals at a relatively poor price position.Traders can wait for further confirmation from the indicator,but the price may also fluctuate further in the direction of your theoretical trade,
thus increasing the risk of trading.3.Understand price action
Technical indicators do suggest what is happening,allowing you to grasp the intelligence driving the market without having to access some fundamental information,but the possibility of false or premature signals is high.Sometimes they move faster,sometimes slower,so any indicator confined to a fixed time chart may be out of sync with the current market fluctuations.
Therefore,understanding price action,what type of stage the market is currently in (consolidation/range-bound/trend),and increasing the time range to look for these clues may improve the accuracy of trading analysis for traders.
4.Adapt to the market environment
The market environment and price action are essentially one concept,and the role of traders is to follow the market.For example,if the market begins to shift from a consolidation to an extreme,you may receive an indicator signal saying to start a trend after breaking through the consolidation range,or you may receive confirmation of a reversal.
On the other hand,just because the indicator indicates that traders can short above a key swing low,even if it is beneficial once or twice,or many similar situations,it is not a beneficial strategy in the long run.The same indicator has different applications in a volatile market and a one-sided market.Only by adapting to the market environment and complementing the indicator can we use the indicator more accurately and benefit from it.
5.Expand the time frame range
Looking at a higher time frame than the one usually executed can have a significant impact on whether the indicator is meaningful.
However,this time frame is not your execution chart.Analysis at a higher time frame can match larger participants and indeed help find some excellent opportunities.
The larger the player,the higher their time frame is usually.Therefore,looking for clues on the chart that are longer than the usual execution time can help traders ensure that they have a larger significance when assessing market behavior.
In any case,the movements that occur over a longer period than your own time frame will also be larger,and if you align with these,you are very likely to find opportunities that can achieve your goals.It should be noted that although traders can also try to use a higher time frame for direct trading,it also introduces too much price risk,as the indicator either exceeds the execution time range or lags behind the execution time range.
In summary,traders must use indicators at the right time and in the right environment.If used wisely,they can be your strong allies,but if not,they will tie you up.
In addition,there are hundreds of technical indicators,and any single technical indicator has its limitations,so we need multiple indicators to corroborate each other.A single indicator has blind spots,but too many indicators can also be dazzling,to a certain extent,and simplifying the indicators appropriately is also crucial.
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