Charting Insights

Salamunalaikum and greetings guys...

Yesterday I had a chat with a friend of mine, a fellow trader with much more experience than I am. Initially, I intended to get some info about an indicator and would like to ask his opinion about that indicator. Well instead of getting straight answers for the question, he answered me with another series questions.That series of question, led to an interesting discussion and revelation about charting style. The discussion was really an eye opener and enlightenment to myself and thus I would like to share it with others.

The questions ( or answers to my questions as I regard it ) were as follows:

1. What kind of indicator that you use for Support & Resistance?
- e.g - Pivot lines / Fibonacci / Andrew Pitchfork / Bollinger Band etc.

2. What kind of indicator that you use for determining trend / wave
- e.g - ZigZag / Elliot Wave / Moving Averages ( or other trending lines )

2. What kind of indicator that you use for determining entry/exit points?
- e.g - RSI / Stochastic / Signal Systems /

Based on the answers you provided for the above question, check your chart for any conflicting indicators (from the same group).

For example, Andrew Pitchfork and Bollinger Band (from Support & Resistance ) are both serving the same purpose but will provide you with different levels of support/resistance lines and this is not very healthy for trading as you will be easily confused (or rather doubtful) to choose which support/resistance level to follow.

The same goes for the other 2 groups (trend/wave and entry/exit points) . There should be no redundant / overlapping indicators that serves the same purpose; but provide signals that difference from each others ( it is generally good to have indicators that support each other but if you have indicators that conflict each other or don't seem agree to each other, then his advice is pick the one that you are most comfortable with and discard the other).

Hmm.. and when asked what kind of indicator that he used.. he replied that there is no point of copying what other traders have on their chart.. each traders have their own preferences and one should develop their own preferences.. by doing this, you will find a suitable trading style ( scalper , intraday , swinger etc ) and discover a set of indicators that truly suits your style.

p/s: to that friend of mine.. thanks for the enlightenment.. you know who you are :P

*updates :

There's an ariticle by Joe Ross on indicators posted at Akuma's Blogspot that more or less discusses the same thing. Click here to warp to the article...bzzzz.