6 Key Ways to Generate Your Own Buy or Sell Signals
It is quite possible for any trader to generate his own buy and sell signals by just following a simple technique of combining two or more technical indicators from a technical analysis by following the trend. As it is usually said in forex trading that the trend is your friend!
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First of all you must understand the definition and working of each of the technical indicators you want to use, like ADX, Stochastic, MACD, RSI, Parabolic SAR, Momentum and Bollinger Bands. As a matter of fact you must do a lot of study and research and then come out with the technical indicators you are most comfortable with.
The combinations are as follows: (1) ADX with Stochastic; (2) MACD with RSI; (3) MACD with Parabolic SAR; (4) RSI with Momentum; (5) RSI, ADX with Parabolic SAR; and (6) Bollinger Bands with ADX.
1. ADX with Stochastic
Signals to buy:
1 - When either %K or %D falls below the line and then again crosses the bottom level upwards or when the curve %K crosses the curve %D from below upward.
2 - When DMI+ is higher than DMI-.
1 - When either %K or %D falls below the line and then again crosses the bottom level upwards or when the curve %K crosses the curve %D from below upward.
2 - When DMI+ is higher than DMI-.
Signals to sell:
1 - When oscillator grows above the line and then crosses the top level downwards or when the curve %K crosses a curve %D from top to downward.
2 - When DMI+ is lower than DMI-.
1 - When oscillator grows above the line and then crosses the top level downwards or when the curve %K crosses a curve %D from top to downward.
2 - When DMI+ is lower than DMI-.
2. MACD with RSI
Signals to buy:
1 - When the MACD rises above the signal line & above zero.
2 - When the RSI rises above 30.
1 - When the MACD rises above the signal line & above zero.
2 - When the RSI rises above 30.
Signals to sell:
1 - When the MACD falls below the signal line & is below zero.
2 - When the RSI is below 70.
1 - When the MACD falls below the signal line & is below zero.
2 - When the RSI is below 70.
3. MACD with Parabolic SAR
Signal to buy:
When an MACD bar is over 0 level and rising, signal line below bars end and rising and SAR dots below price chart.
When an MACD bar is over 0 level and rising, signal line below bars end and rising and SAR dots below price chart.
Signal to Sell:
When MACD bars is below 0 level and falling, signal line over bars end and falling and SAR dots over price.
When MACD bars is below 0 level and falling, signal line over bars end and falling and SAR dots over price.
4. RSI with Momentum
Signal to buy:
RSI rises above 50 but stays below 70 and momentum rises above zero.
RSI rises above 50 but stays below 70 and momentum rises above zero.
Signal to sell:
RSI falls below 50 but stays above 30 and momentum falls below zero.
RSI falls below 50 but stays above 30 and momentum falls below zero.
5. RSI, ADX with Parabolic SAR
Signals to buy:
1 - When RSI cross 30 level and rising up.
2 - SAR dots below the price chart.
3 - DMI+ over DMI-, ADX line cross 20 level, ADX and DMI+ rising and DMI- falling.
Exit when SAR dots make a cross with the price chart & ADX moving below 30 from above while above DMI+ and DMI-.
1 - When RSI cross 30 level and rising up.
2 - SAR dots below the price chart.
3 - DMI+ over DMI-, ADX line cross 20 level, ADX and DMI+ rising and DMI- falling.
Exit when SAR dots make a cross with the price chart & ADX moving below 30 from above while above DMI+ and DMI-.
Signals to sell:
1 - When RSI cross 70 level & falling down.
2 - SAR dots over the price chart,
3 - ADX line cross 20 levels and rising where DMI+ falling and DMI- rising.
Exit when SAR dots make a cross with price chart & ADX moving below 30 from above & above DMI+ and DMI-.
1 - When RSI cross 70 level & falling down.
2 - SAR dots over the price chart,
3 - ADX line cross 20 levels and rising where DMI+ falling and DMI- rising.
Exit when SAR dots make a cross with price chart & ADX moving below 30 from above & above DMI+ and DMI-.
6. Bollinger Bands with ADX.
Signal to buy:
When the price below the lower band of Bollinger (20, 2) & DMI+ cross over DMI-, ADX line cross 20 level, ADX and DMI+ rising and DMI- falling.
When the price below the lower band of Bollinger (20, 2) & DMI+ cross over DMI-, ADX line cross 20 level, ADX and DMI+ rising and DMI- falling.
Signal to sell:
When the price above the upper band of Bollinger (20, 2) & ADX line cross 20 levels and rising where DMI+ falling and DMI- rising.
When the price above the upper band of Bollinger (20, 2) & ADX line cross 20 levels and rising where DMI+ falling and DMI- rising.
My own area of comfort is the combination of MACD with RSI to generate my buy and sell signals for intraday trading.
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