"There is a column currently published on Toyo Keizai ONLINE!" What is the most profitable technical indicator?
Good morning, this is Matsushita.
I receive the most questions from newsletter readers, students of my school,
and in interviews and conversations across various media,
one of the most common questions I get is,
"What is the技 most profitable technical method?"
This is the question.
Today, in a sense, I would like to answer this ultimate question.
If you have known me for a long time,
you probably know what I would answer to this question.
"Any technical method can be effective,
and when used properly, you can generate profit."
That is my answer.
Since it is exactly as stated,
there is no other answer I can give.
From here on, I would like to write in terms of my preferences and subjectivity.
My most favorite technical indicator is the
moving average line.
It is the simplest and most powerful technical indicator, and
my profitability began when I learned to master the moving average line.
The reason I love moving averages is that they are very simple and easy to understand.
Because I am inherently simple-minded,
I like simple indicators.
I still love moving averages and rely on them heavily.
Next, moving averages are trend-based indicators,
which excel at recognizing the formation and continuation of trends,
so to recognize trend overshoot or overextensions,
it is recommended to pair them with oscillator-type indicators and display them on the chart.
Oscillator-type technical indicators,
are effective at recognizing overextensions in price movements, and
the representatives are RSI,Stochastic, RCI, and CCI, etc.
Among them, my favorite is RSI, and
the reason I like it is its simplicity.
By the way, my mentor Meriman displayed Stochastics on the chart
as of January 2010,
which is when he was using them.
Display moving averages and RSI on the chart,
and from both trend-based and oscillator-based indicators,
you can identify the formation and continuation of trends,
as well as overshoot.
Moreover, the technical indicator that I am now intensely focused on
is ADX.
ADX is a relatively minor technical indicator, but
for about the last ten years I have been exploring it,
and the more I learn, the more convinced I am of its effectiveness.
ADX is an indicator that shows the strength of a trend,
but it cannot tell you the direction of the trend.
Also, by default,
its sensitivity is rather dull, which is a drawback, but
the advantages far outweigh that drawback.
Specifically, for short-term breakout trades,
it is extremely effective and helps to increase win rates.
Using ADX for short-term breakouts,
I continuously pursue high-winning trades.
All technical indicators can be profitable if used effectively.
Clarify your objective, and select indicators that align with it,
and draw out their power to the fullest.
