Wednesday, May 28, 2008

Indicators Setting

Many of us traders especially beginners have a little idea of how the settings of indicators affect our trading. This misconception or lack of understanding will result in them to find the best setting of all from other fellow traders. In their effort to do so they constantly fail along the way as confusion loom when one setting after another failed to deliver good results.

The fundamental idea of the settings actually lies on the mathematic of moving average. For example if you average numbers with smaller gap for example 1 and 2 will give you more volatile picture on the chart whereas 1 and 10 average is much more smoother. If you think about it again they are actually coming from the same source the only difference is the gap of average. Therefore it is doesn't really matter whatever settings you are using it will still be same. The most important thing is how to relate the movement of the chart with the indicators.

Try to get yourself sometimes to study the chart with a single setting for the indicators. You will better this way and able to understand more about the chart movement relationship with the indicators.

If you have really have no idea what setting you use try this one;

Stochastich: FastK: 5 SlowK: 5 SlowD: 3
Bollinger Bands: Period: 20 Multiple: 2.2
Moving Average Convergence Divergence (MACD): Fast EMA: 12 Slow EMA: 26 MACD SMA: 9

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