Indicators are just manipulations of price data or volume data, therefore many day traders don’t use indicators at all. Indicators aren’t required for profitable trading. Practice day forex indicator technical trading based on price action and there is little need for indicators. That said, an indicator does help some people see things that may not be obvious on the price chart.
For example, the price is trending higher, but it is losing momentum. Unfortunately, indicators come with their own sets of problems, signaling a reversal too soon or too late. Indicators aren’t inherently bad or good, they are just a tool and therefore whether they are detrimental or helpful depends on how they are used. Many indicators are almost exactly the same, with slight variations. Also, indicators may be part of the same “family. MACD can give the same information. 12 and 26-period MAs to your price chart, the MACD indicator and MAs will tell you the same thing.
When the MACD crosses above or below the zero the line, that means the 12-period moving average crossed above or below the 26-period. If you added these indicators to your chart they would always confirm each other, because they are using the same input. Even picking only one from each group could lead to redundancies and clutter, without providing additional insight. Oscillators: This is a group of indicators that flow up and down, often between upper and lower bounds. Volume: Aside from basic volume, there are also volume indicators.
These typically combine volume with price data in an attempt to determine how strong a price trend is. Overlays: These are indicators that overlap the price movement, unlike a MACD indicator for instance which is separate from the price chart. With overlays, you may choose to use more than one, since their functions are so varied. Breadth Indicators: This group includes any indicators that have to do with trader sentiment or what the broader market is doing. There is little need for more than one oscillator, breadth or volume indicator. You may find uses for a few overlays though, helping to indicate trend changes, trade levels and areas of potential support or resistance.
Master using price action and overlays and you likely won’t have a need for the other types of indicators. Consider picking one or two indicators to help with entries and exits, respectively. For example, an RSI could be used to help isolate the trend and entry points. In an uptrend, the RSI should be extending above 70 on rallies and staying above 30 on pullbacks.