#DayTradingStrategy
📊 Chapter 6 Summary – Technical Indicators (John Murphy)
Technical indicators are mathematical tools that help traders interpret price and volume data. In Chapter 6, John Murphy divides indicators into three main types: trend-following indicators (like Moving Averages and MACD), momentum oscillators (such as RSI and Stochastic), and volume-based indicators (like On-Balance Volume).
Trend indicators confirm the direction of the market, while momentum indicators identify overbought or oversold conditions. Volume indicators help confirm the strength behind price movements.
Murphy stresses that no single indicator is reliable alone. He recommends using a combination—such as MACD for trend confirmation and RSI for timing—to improve decision-making. Importantly, he warns against “indicator overload,” where too many tools on a chart can create confusion instead of clarity.
The key takeaway is to treat indicators as supportive tools, not predictive engines. They are most effective when combined with chart patterns, support/resistance zones, and an understanding of overall market behavior.
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🔍 This is educational content, not financial advice.