Thursday, June 9, 2011

The principle of Confirmation

Arthur Sklarew, is author of 'Techniques of a Professional Commodity Chart Analyst'. In writing about the rule of multiple techniques  he states:

Technicians know very well that price chart analysis is not an exact science. No single chart technique yet discovered is infallible. Despite this lack of perfection, price chart analysis can very often give reliable forecasts of trend direction . . . Confirmation is therefore an essential component of every valid chart signal. In addition to comparing price charts of different contract months and time scales, it has been my experience that the accuracy of any technical price forecast can be improved greatly by the application of a principle that I call the “Rule of Multiple Techniques.”

The Rule of Multiple Techniques requires that the chart technician not rely solely on one single technical signal or indicator but look for confirmation from other technical indicators. The more technical indicators that confirm each other, the better the chance of an accurate forecast. The logic behind this rule is that, if individual timeproven techniques tend to be right most of the time, a combination of several such techniques that confirm each other will tend to be right even more frequently.

3 comments:

KEVIN said...

Hello Sir,
I agre with ur aticle on Principle of Confirmation
An threfore I do use them in my Trading plan where i get signals form my indicator based system which i try to confirm with price based patterns through chart and candlestick patterns

viks said...

help us showing graphs

Meshach. M said...

i have a small observation when all indicators give a signal together the signal seems to fail as everyone is already in that direction .....