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| What are the types of trend indicators? Why must you apply the right type of indicator? |
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Definition
| There are two indicators: trending and non-trending indicators. Trending indicators assume a market is in a trend. Non-trending indicators assume price stability. If you apply trending indicators to a non-trending market, they can give false signals, and vice versa.[image] [image] |
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Term
| How do I know whether the market I'm looking at is trending? |
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Definition
| You can assess either by visually eyeballing the chart or by using technical indicators like the Average Directional Index (ADX). [image] |
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Term
| What is the suggested number of technical indicators you should use? |
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Definition
| Stick to three indicators or fewer. More indicators may add more value to your assessment, but it may also overwhelm your trade. Keep it simple until you become more adept. |
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Definition
| The most popular indicator that shows whether a security is trending is the Average Directional Index (ADX), which measures the strength of a trend rather than its direction. In this chapter, ADX covers a period of 14 days, a standard setting for this popular indicator. |
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Definition
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| What are three major trending indicators? |
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Definition
1. Directional Movement Index (DMI)
2. Moving Averages
3. Moving Average Convergence/Divergence (MACD) |
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| What are the guidelines in using DMI? |
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