Ask Colin

Where can I find a book that will tell me how a number of different indicators could be used in unison to come to decision?

Most of the books tend to show you only the writer's favourite indicators.

However, in writing the subject FIN231 Technical Analysis now offered by Kaplan and which can be attempted by non-graduates by being a member of the ATAA (see www.ataa.com.au), I tried to provide a structure in which the indicators fall.

The key issue is that there are two main groups of indicators: trend following indicator and momentum oscillators. Within each group all the indicators are measuring the same basic idea, but in a variety of ways.

There is no logical reason why a sum of the trend following indicators is any better than just the one indicator which best suits your trading method.

So, my suggestion is to define your trading plan and then select the indicaor that feels most comfortable to you. Then test it on a range of stocks through different market cycles before employing it with real money.  

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