Also read the previous post: How to Choose the Best Technical Analysis Indicator Part I.
Now that you are enlightened on how to choose the best technical indicators, you now need to know some dos and don'ts when choosing a technical system. There are three things you should never do.
First, using too many indicators. For example: you already use the leading stochastic indicator, you add more to use RSI, then add more to use RVI, add more to Williams%. Already using MA, adding more Bollinger bands, adding MACD.
Too many indicators make you a lazy trader. For example, you use a lot of indicators. Stochastic says it's time to buy, RSI says it's still going down, RVI says sell, Williams% says buy. Hey, do you want to buy or sell?
I think you get what I mean. Using too many indicators won't help you any more, it will make it difficult for you. Get rid of the wrong thinking of traders: The more indicators, the more helpful they are. If you are already using one leading indicator, my advice is you can use a maximum of one other leading indicator. So, you can only use a maximum of 2 leading indicators.
Second, like changing indicators. Today I wear MA, tomorrow I change to a band. Today using stochastic, tomorrow using momentum, then again using RMI. Today we use MA 10, tomorrow we will change again to MA 20, change again to MA 50 and so on. Changing indicators will only "torment" yourself, and make you confused which indicator to use. If you use multiple indicators, test them several times. If you feel it doesn't fit, you can just try another indicator. And one more thing, never use indicators that you don't understand.
Third, do not set a trading period. For example, you say you want to be swing trading for a period of less than one week, so you install MA 10. Suddenly you change to want to invest, you change to pairs of MA 200. Then, you want to trade for a few months, you change again to put MA 50. No setting a trading timeframe is a big mistake that can cause your indicator selection to go awry.
These three things are often a barrier for traders to make profits.
