Combining Indicators Without Redundancy
Two indicators that measure the same thing count as one — or zero.
Written and reviewed by the Fundezy team · how we produce this
More indicators do not mean more information. The classic beginner dashboard — three trend indicators, two momentum oscillators and a volume gauge — feels rigorous and is actually one signal counted five times.
The redundancy rule
Indicators fall into families:
| Family | Measures | Examples |
|---|---|---|
| Trend | Direction | SMA, MA crossovers |
| Momentum | Speed | RSI |
| Volatility | Dispersion | Bollinger Bands width |
When two indicators from the same family agree, they are usually sharing the same underlying data — the second adds confirmation of the same fact, not new evidence. A useful combo draws from different families, so each checks something the others can't see.
A minimal, non-redundant stack
Using only what's on your chart:
- Structure (HH/HL — not an indicator, but step one regardless)
- SMA(14) → trend/dynamic level
- RSI(14) → momentum timing of pullbacks
- Bands/squeeze (conceptually) → volatility regime
A trade idea that survives all four checks is rare — which is the point. Scarcity of signals is a feature.
Evidence beats feelings
Every combination you're considering can be tested. Course 06 shows you how to encode a rules-based idea as an EA and run it over real historical data on this platform. Opinions about indicators are cheap; a backtest report with N trades and total P/L is evidence.
When to drop an indicator
If removing a filter from your checklist doesn't change your backtest results, it was decoration. Trim until every remaining rule earns its place in the statistics.
Key takeaway
Aim for two or three uncorrelated checks, structure first. The goal is not to be certain — no stack achieves that — it's to make the odds measurable and repeatable.
By the numbers
A warning from the research frontier: Harvey, Liu and Zhu (2016) catalogue more than 400 published "significant" trading factors, most of which failed to hold up once retested — demand harder evidence for every extra indicator. The redundancy rule keeps your stack honest: trend, momentum and volatility are three different families, and three checks is a full stack.
Practice in the simulator
Build a chart with SMA + RSI together — apply what you just read with simulated money.
Check your understanding
3 questions · answer all, then submit.