Technical Analysis For Dummies, 3rd Edition

Chapter 16

Combining Techniques

In This Chapter

Figuring out positive expectancy

Discovering your trading style

Looking at complexity

Before you can combine a selection of the techniques presented in this book, you need to determine whether you want to be a trend-follower with a trading system or a once-in-a-while trader who grabs only the occasional setup.

System trading sounds appealing, but is labor-intensive. Its one lasting benefit is that you always know when embarking on a new trade what the likely outcome will be. Expectancy is the term used to define the probability of a trade. How do you get a grip on expectancy if you are just starting out? You can either back-test, or you can practice-trade.

In practice, many traders do not know their expectancies and do trade in what seems like a hit-and-miss way, but succeed in the long run. They do this by intense concentration on repetitive pattern identification.

If trading with one indicator is better than trading with none, combining two indicators works even better. You can add as many indicators to your charts as you can hold in your head or program into your computer.

This chapter surveys some combinations of techniques and ...