Technical analysis indicators are one of the most promising tools for market analysis. The indicator modifies market information and presents it to the trader in its own unique way. This allows the trader to see what was previously hidden from him and take a fresh look at the market situation.
And so our trader, armed with a set of indicators, like a wizard with his wands, begins to see things in the charts that an ordinary mortal would take for an abstract painting of a mentally ill person.
Sometimes it seems to him that the MACD paints a portrait of his ex-girlfriend, then the RSI depicts the trajectory of his last unsuccessful investment, and stochastic generally hints that it's time to go to the kitchen for a third cup of coffee.
The most interesting thing begins when the indicators start to contradict each other: one shouts “Buy!”, another screams “Sell!and the third one is thoughtfully silent, apparently digesting the information in his algorithmic brain. At such moments, the trader feels like the captain of a ship in a storm, who receives conflicting signals from all the instruments at the same time.
The secret is that before using any indicator, you need to make sure how and where it provides a statistical advantage. And that's the only way to use it. You don't have to stare furiously at the indicator line and look for patterns on the last three bars of the chart in order to save your very scary losing position. You need to learn how to work with any tool, and technical indicators are no exception.