Different Indicators used for Technical Analysis

Now before I get started on trying to make prediction about the stock market movement, let's go throught the different indicators I will be using and how I intend to use them. If, by a strike of luck a seasoned pro happened to chance upon this blog, do give me some pointers on how to refine my method of using these indicators. I will be eternally grateful. For the noobs, however, please note that this is my own method that I created for MYSELF, a noob, and not as a guide for anyone to follow. Recall the story about the blind following the blind?

Should anyone think that the indicators I mentioned here can help you in your trading as well, please do your own research on them. The stuff I wrote here is for my own reference and very basic due to the fact that I am not a good writer at all.

Before I get started, kindly note that these are mainly used for short term trading (Interdays), as I am not a day trader (Intraday/ Contra) for I do not have the time to stare at my computer screen whole day. However, I do use them as a gauge for entry point for my long term investment (Yield) as well. 

*Note that the indicators below are not used independently.

ADX:

One of my main indicators to gauge how strong is the Bull/ Bear trend. These are my rules:

1. Look for counters that are not trending (ADX line below 20), as they are bound to break up/down.
2. Buy (entry point) when +DI crossed above -DI and the ADX line is above 20.
3. Sell (exist point) when -DI crossed above +DI and ADX line is above 20.

MACD:

The other main indicator which is very commonly used to indicate the trend itself.

1. Buy when the MACD line crossed above the 0 line and above the signal line.
2. Sell when the Signal line crossed above the MACD line.
3. Sell when the MACD line crossed below the 0 line.

Parabolic Stop and Reversal:

A sub indicator that I use as a confirmation signal to buy/sell for my 2 main indicators.

1. Buy when the dot is below (normally green in colour).
2. Sell when the dot is above (normally red in colour).

Candlestick/ Doji and Volume:

Last but not least are the candlesticks or doji which I also use more as a confirmation signal.There are many ways to use the candlesticks, and in the hand of the pro, the details that can be extracted are nothing short of amazing. Nonetheless, on my skill level, I use them in the most basic way as followed.

1. White candlestick with high volume act as a confirmation for buy signal.
2. White candlestick with low volume act as a wait and see for buy signal
3. Black candlestick with high volume act as a confirmation for sell signal
4. Black candlestick with low volume act as a wait and see for sell signal

Others:

I also use 4 Exponential Moving Average (10/50/100/200) as well as the Fibonacci Retractment to gauge the Support and Resistance for my expected entry and exit strategies.

As I have mentioned earlier, these indicators cannot be used independently due to the high amount of whipsaws or false signals, which can wiped out your capital, or worst, your whole saving.

Preview: Next entry, I will blog about how I combined the different indicators and create my own trading system which I will test out in the next few entries.