There are numerous posts in forums commenting on indicators which do not function properly and gives erroneous signals. However, professionals have no issues with any of the indicators. It is because of the input parameters. While 14-day RSI may be generic and used by every one on a 30-min time frame, there are instances where a 20-day RSI would work perfectly in a different time frame. So, parameter optimization carries a lot of importance and seldom spoken about in technical analysis. It is the parameters that determined the buy/sell signals. Unless the parameters are apt, the signals will not be perfect.
Thus, it is better for a trader to test various parameter inputs to an indicator and identify the best suited for a time frame. The result can be back and forward tested as well on a demo platform. From then on, the indicator with the identified parameter can be used to trade in the market. This will allow trading with confidence and result in better success percentage.
Thus, it is better for a trader to test various parameter inputs to an indicator and identify the best suited for a time frame. The result can be back and forward tested as well on a demo platform. From then on, the indicator with the identified parameter can be used to trade in the market. This will allow trading with confidence and result in better success percentage.
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