It is rather a study in mathematics and economics. You are required to know and analyze it’s behavior based on the different types of technical analysis calculations that basically shows where the dollar is headed, based on mathematics, and is the preferred method of successful traders. When combining two or more of them, that should increase the probability of the direction of the market, and the exact stage of where its at. Is it going to go up, down or stay sideways. Is the current market trend at the end of its cycle, or at the beginning.
As you opt to use the various indicators, it’s pertinent to remember that many of these calculations include different angles and formulas to predict the same thing, where the market is going. Using a few of the technical indicators at one time, and if they all show that the market is about to move in a certain direction, creates the perfect storm. That’s why it’s a good idea to consult several breeds of indicators, to be able to draw a clean, clear conclusion.
The 4 Basic Classifications Of Technical Indicators
1.) The Trend Indicators
The Volume Indicators
The Volatility Indicators
These four groups of technical indicators all indicate the movement of the market in different ways. Picking and using one indicator from each group, may give you a clearer indication of: if the market trend is beginning or ending, when to enter the market and at what volume, when you should exit the market once trading. If all four indicators converge, it may then be indicating the market has either topped or bottomed out, and it’s time to enter a ‘buy’ or ‘sell’ trade. So happy pipping.