Trading 101: How to Combine Technical Indicators

Designing your trading strategy based on MACD combinations

A well functioning strategy can be compared to a Negroni. The popular Italian cocktail is made of 3 liquors: Gin, Campari and Martini Rosso.

Poured on their own in an old fashion glass, these three liquors would make even the most seasoned bartender gag. But put them together, and they counteract each other’s negatives. What you’re left with is a deadly but delicious summer cocktail that will turn every picnic into a party.

Great traders combine technical indicators in the same way. They understand that the shortcomings of one may actually be fixed by another, and vice versa.

This blog will highlight some strategies that are made up of combined technical indicators and which, when read together, do not clutter up your charts. Yet, consulting more than one indicator at the same time is very important. In fact, few traders use just one indicator to conduct their strategies.

A combination will strengthen a traders conviction. Multiple indicators giving the same type of signal (buy or sell signal) will help them decide with more certainty whether the position should be opened or not. In this way, the chances of a trade being positive are higher, and false signals are filtered out.