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Indicators

How Many Indicators You Actually Need

Indicators come in four families — trend, momentum, volatility and volume — and two from the same family answer the same question twice, so the count that matters is how many families a chart uses, not how many lines are on it. This paper shows you four momentum indicators on the same days drawn from real bars, bottoming together and topping within a week, the idea as four thermometers on one wall, one indicator from each of two families on the chart, the four drawers with the common indicators in each, and how your platform's menu is sorted.

Difficulty
Advanced
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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Four lines, one question

Here are four momentum indicators on the same days, drawn from real daily bars: gold from March to May 2025, with RSI, the stochastic, CCI and Williams %R each stretched to a strip from 0 to 100. All four bottomed on the same day, 8 April. Their tops came within a week of each other, on 11, 16 and 21 April. On 36 of the 63 days all four moved the same way, and where they disagreed it was on small days. They are one question asked four ways: how hard has the price been pushing lately. A chart with all four on it has asked it four times.

Four thermometers on one wall

Picture four thermometers on one wall. They are made by different firms and marked in different units, but the room has one temperature, so the second, third and fourth tell you nothing the first did not. RSI, the stochastic, CCI and Williams %R are four thermometers. What a wall needs is one thermometer, one barometer and one clock: one instrument for each thing you want to know. That is the whole answer to how many, and it is a count of instruments of different kinds.

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