Forex for a trader
Stochastic parameters forex

Stochastic parameters forexMACD + Stochastic + RSI. "Basic is the best" I pound to present my system, which I've been using MACD, Stochastic and RSI in 1H, 4H and 1D chart. If all signal in every chart show same signal that can verify and you can open your order with confidencially. after that wait for profits. Good luck for you and me . If you interest, you can download my template and indies. Visit my blog daily analysis. Finally, I hope your about this. Thanks, friends. Could you give details of your system? please explain ur system. setup&MM. Basically all you have said is "use 3 indicators and 3 timeframes and you'll make money." Oops, that's not a trading system, and you've posted in the "Suggestions for Trading Systems" section. So, could you give us your trading system please? pict from link (first post) Asepticme, after sertain amount of posts it'll let you upload attchements. (forums regular untispam mesures) if you worked it as the system (not just general method) - could be interesting. everything's cool. but. SL where are you ?! be careful with no using SL. Here my simple Trade..

1. Exponential moving average 50. 4. Stochastic Oscilator ( 10 5 5) 5. Daily Pivot Point. Trading rules Rules for Long trades. 1 The price should be above the 50 EMA. 2 MACD histogram should be above zero level. 3 RSI should be above 50 line. 4 Stoch should be above 50 line. 5 Entry is above support line or a broken resistance line. 6 Stop loss is below the closestnext support line. 7 Target is at nearest resistance line. Rules for short trades. 1 The price should be below the 50 EMA. 2 MACD histogram should be below the zero line. 3 RSI should be below 50 line. 4 Stoch should be below 50 line. 5 Entry is below resistance or a broken support line.

6 Stop loss is above the closestnext resistance line. 7 Target is the nearest support line. just 1 trade every day. yesterday i got $144 Live acc from EurUsd and GbpUsd. Stochastic parameters forex. Trading with Stochastic indicator involves the following signals: Stochastic lines cross — indicates trend change. Stochastic readings above 80 level — currency pair is overbought, Stochastic staying above 80 level — uptrend is running strong. Stochastic exiting 80 level downwards — expect a correction down or beginning of a downtrend. Same for readings below 20 level — currency pair is oversold, staying below 20 — doentrend is running strong, exiting upwards above 20 — expect an upward correction or a beginning of an uptrend. The idea behind Stochastic indicator. The main idea behind Stochastic indicator according to its developer, George Lane, lies in the fact that rising price tends to close near its previous highs, and falling price tends to close near its previous lows. How to interpret Stochastic indicator. Stochastic is a momentum oscillator, which consists of two lines: %K - fast line, and %D - slow line. Stochastic is plotted on the scale between 1 and 100. There are also so called "trigger levels" that are added to the Stochastic chart at 20 and 80 levels.

Those lines suggest when the market is oversold or overbought once Stochastic lines pass over them. How to trade with Stochastic indicator. Let’s look at three methods of trading with Stochastic indicator. Method 1. Trading Stochastic lines crossover. This is the simplest and common method of reading signals from Stochastic lines as they cross each other. Stochastic %K and %D line work similar to moving averages and: when %K line from above crosses %D line downwards traders open Sell orders. when %K line from below crosses %D line upwards traders open Buy orders. Stochastic lines crossovers that happen above 80% level and below 20% level are treated as strongest signals, compare to crossovers outside those levels. Traders may choose sensitivity of their Stochastics. The smaller the Stochastic parameters, the faster it will react to market changes, the more crossovers will be shown. Sensitive Stochastic (for example 5, 3, 3) is useful for observing rapidly changing market trends. But because it is too choppy it should be traded in combination with other indicators to filter out Stochastic signals.

Method 2. Trading Stochastic oversoldoverbought zones. Stochastic by default has 80% level, above which market is treated as overbought, and 20% level, below which market is considered oversold. It is important to remember that while in sideways moving market a single Stochastic lines crossover that occur above 80% or below 20% will most of the time result in a fast predictable trend change, in trending market could mean just nothing. When price is trending well, Stochastic lines may easily remain in overboughtoversold zone for a long period of time while crossing there multiple times. That’s why a method of trading overboughtoversold zones stands up. The rules here are to wait until Stochastic lines after being in overboughtoversold zone come out from it. E. g. When stochastic was trading for some time in overbought zone – above 80% level, traders wait for the lines to slide down and eventually cross 80% level downwards before considering to take Short positions. Opposite for Long positions: wait till Stochastic lines come into the oversold zone (below 20% level); wait further until Stochastic lines eventually cross 20% level upwards; initiate a buy order once Stochastic lines are firmly set, e. g. a trading bar is closed and Stochastic lines cross over 20% mark is fixed. Method 3. Trading Stochastic divergence. Traders are looking for a divergence between Stochastic and the price itself. At times when the price is making new lows while Stochastic produces higher lows creates dissonance in the picture. It is called divergence. Divergence between price and Stochastic readings suggest a forming weakness of a main trend and therefore its possible correction. Full versus Fast versus Slow stochastic. Full Stochastic inidcator has 3 parameters, like: Full Stoch (14, 3, 3), where the first and the last parameters are identical to those found in Fast and Slow Stochastic: the first parameter is used to calculate %K line, while the last parameter represents the number of periods to define %D - signaling line.

The difference between Full and other Stochastics lies in the second parameter, which is made to add smoothing qualities for %K line. Applying this smoothing factor allows Full Stochastic be a bit more flexible for chart analysis. How to Trade with Stochastic Oscillator. by Jeremy Wagner, CEWA-M , Head Forex Trading Instructor. Swing trading, chart patterns, breakouts, and Elliott wave. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets.

We'll email you login details shortly. You are subscribed to Jeremy Wagner. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form. Please try again later. Using Slow Stochatics to Trade Talking Points: Slow Stochastic provides clear signals in a forex strategy Take only those signals from overbought or oversold levels Filter forex signals so you are taking only those in the direction of the trend. Stochastic is a simple momentum oscillator developed by George C. Lane in the late 1950’s. Be ing a momentum oscillator, Stochastic can help determine when a currency pair is overbought or oversold . Since the oscillator is over 50 years old, it has stood the test of time , which is a large reason why m any traders use it to this day. Though there are multiple variations of Stochastic, today we’ll focus solely on Slow Stochastic. Slow stochastic is found at the bottom of your chart and is made up of two moving averages. These moving averages are bound between 0 and 10 0. The blue line is the %K line and the red line is the %D line. Since %D is a moving average of %K , the red line will also lag or trail the blue line. Traders are constantly looking for ways to catch new trends that are developing. Therefore, momentum oscillators can provide clues when the market ’ s momentum is slowing down, which often precede s a shift in trend.

As a result, a trader using stochastic can see these shifts in trend o n the ir chart. Learn Forex: Slow Stochastic Entry Signals. (Created by Jeremy Wagner) Momentum shifts directions when these two Stochastic lines cross . Therefore, a trader takes a signal in the direction of the cross when the blue line crosses the red line. As you can see from the picture above, the short term trends were detected by Stochastic. However, traders are always looking for ways to improve signals so they can be strengthened. There are two ways we can filter these trades to improve the strength of signal. 1 - Look for Crossovers at Extreme Levels. Naturally, a trader won’t want to take every signal that appears. Some signals are stronger than others. The first filter we can apply to the oscillator is taking cross overs that occur at extreme levels. Learn Forex: Filtering Stochastic Entry Signals. (Created by Jeremy Wagner) Since the oscillator is bound between 0 and 100, overbought is considered above the 80 level. On the other hand, oversold is considered below the 20 level. Therefore, cross downs that occur above 80 would indicate a potential shifting trend lower from overbought levels.

Likewise, a cross up that occurs below 20 would indicate a potential shifting trend higher from oversold levels. 2 - Filter Trades on Higher Time Frame in Trend’s Direction. The second filter we can look to add is a trend filter. If we find a very strong uptrend, the Stochastic oscillator is likely to remain in overbought levels for an extended period of time giving many false sell signals. We would not want to sell a strong uptrend since more pips are available in the direction of the trend. (see “ 2 Benefits of Trend Trading ”) Therefore, if we find a strong uptrend, we need to look for a dip or correction to time a buy entry. That means waiting for an intraday chart to correct and show oversold readings. At that point, if Stochastic crosses up from oversold lev els, then the selling pressure and momentum is likely alleviated . This provides us a signal to buy which is in alignment with the larger trend. In the EURJPY chart above, prices were well above the 200 Day Simple Moving Average (the moving average wasn’t shown because it was well below the current prices). Therefore, if we filtered trades according to the trend on a daily chart, then only the long signals (green arrows) would have been taken. Therefore, traders us e Stochastic to time entries for trades in the direction of the larger trend. Try it out for yourself.

Try it out for yourself in a practice account. Not sure how to manage your risk on a trade? We’ve researched millions of live trades and found this one little tweak to risk to reward ratios on trades increased the pool of traders who were profitable from 17% to 53%. ---Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education. Follow me on Twitter at @JWagnerFXTrader. See Jeremy’s recent articles at his DailyFX Forex Educators Bio Page. Learn how to incorporate other strategies and techniques into your trading to be a better trader by signing up for our free guide , Traits of Successful Traders. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Best Stochastic Trading Strategy - Easy 6 Step Strategy. Day trading with the best Stochastic Trading Strategy is the name of the strategy we’ll discuss today. As the name suggests, this is a stochastic strategy suitable for day traders. The stochastic strategy is much the same as the Day Trading Price Action - Simple Price Action Strategy, but the only notable difference is that this time around, we incorporate into our strategy a technical indicator, namely the stochastic indicator. This is the best Stochastic trading strategy because you‘ll be able to identify market turning points with accurate precision.

Warning! This can turn you into a modern sniper elite trader because the Stochastic indicator will only make you pull the trigger at the right time. A modern sniper elite trader only pulls the trigger on a trade when he is certain that he can pull a winning trade. We at Trading Strategy Guides. com looking forward to developing the most comprehensive library of Forex trading strategies that can really help turn your trading around. The favorite time frame for the Best Stochastic Trading Strategy is the 15-minute chart because we have taken the time to backtest best Stochastic Trading Strategy and the 15-minute TF came over and over again . If you’re a day trader, this is the perfect strategy for you. The stochastic strategy evolved into being one of the best stochastic strategies because, despite the stochastic indicator being a very popular indicator among traders, they have been using it the wrong way. Our team at Trading Strategy Guides. com interprets the charts and the indicators in an unorthodox way, but at the same time, it’s very productive. Day trading might not be your thing, but perhaps you’re interested in trading on the higher time frames, like the daily chart. Don’t panic; we have your back, our favorite MACD Trend Following Strategy is the best trend following strategy. For every Forex strategy, we at Trading Strategy Guides. com have developed we make sure we leave our own signature and make it simply the best. You can also read our best Gann Fan Trading Strategy. Before we move forward, we must define the indicators you need for day trading with the best Stochastic Trading Strategy and how to use stochastic indicator.

The only indicator you need is the: Stochastic Indicator : The stochastic indicator was developed by George Lane more than 50 years ago. The reason why the stochastic indicator survived for so many years is because of the popularity of this indicator and also because it continues to show consistent signals even in this current times. Without further ado, let’s move straight to the point and: Define what the Stochastic indicator is; How to use Stochastic indicator; What are the Stochastic indicator settings; The Stochastic indicator is a momentum indicator that shows you how strong or weak the current trend is. It helps you identify overbought and oversold market conditions within a trend. The stochastic indicator should be easily located on most trading platforms. The Stochastic indicator looks like this: After extensive research and backtesting, we’ve found that the stochastic indicator is more suitable for day trading while indicator like the MACD is more suitable for swing trading. You should really check out our amazing MACD Trend Following Strategy that we decided to share with our trading community only recently. Another reputable oscillator is the RSI indicator which is similar to the Stochastic indicator, but we chose it over the RSI indicator because the Stochastic indicator puts more weight on the closing price which by the way is the most important price no matter what market you trade. This strategy can also be used to day trading stochastics with a high level of accuracy. Let me just quickly tell you how to use the stochastic indicator and how to interpret the information given by this amazing indicator so you can know what you’re trading. When the stochastic moving averages are above the 80 line, we’re in the overbought territory; conversely, when the stochastic moving averages are below the 20 line, we’re in oversold territory. Please have a look at the chart example below to see how to use stochastic indicator. So, how does the stochastic indicator work? The stochastic oscillator uses a quite complex mathematical formula to calculate the moving averages: %K = 100(C – L14)(H14 – L14) C = the most recent closing price L14 = the low of the 14 previous trading sessions H14 = the highest price traded during the same 14-day period %K= the current market rate for the currency pair %D = 3-period moving average of %K. See below where to locate the %D and %K lines: The mathematical formula behind the Stochastic indicator works on the assumption that the closing prices are more important in predicting oversold and overbought conditions in the market. Based on this assumption the Stochastic indicator works to give you the best trade signals you can possibly find. What about the stochastic indicator setting? Best stochastic settings for 15 minute chart.

The default settings for the stochastic indicator are 14,3,1. Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules. Let’s get started….. Day trading with the best Stochastic Trading Strategy. (Rules for a Buy Trade) Step #1: Check the daily chart and make sure the Stochastic indicator is below the 20 line and the %K line crossed above the %D line. We’re daytrading, but having in mind the higher time frame sentiment and trend. This is a crucial part of the strategy because we only want to be trading in the direction of the higher time frame trend. Our team at Trading Strategy Guides. com has put a great deal of time in developing the best guide to Trading Multiple Time Frames – The Key to Successful Trading. The multiple time frame concept is important because it can give you a more robust reading of the current price action and more it can help you better time your entry and exit points. Note*: On the daily chart, it’s not necessarily for the stochastic moving averages to be below the 20 level. They can be moving away from the oversold territory and the signal can still be valid, but it shouldn’t be above 50 level. Step #2: Move Down to the 15-Minute Time Frame and Wait for the Stochastic Indicator to hit the 20 level. The %K line(blue line) crossed above the %D line(orange line). This step is similar to the previous rule, but this time we apply the rules on the 15-minute time frame: wait for the Stochastic indicator to hit the 20 level and the %Kline (blue line) is crossing above the %D line (orange line).

The 15-minute chart is the best time frame for day trading because is not too fast and at the same time not too slow. See figure below: It is said that the market can stay in overbought and oversold condition longer than a trader can stay solvent. So we want to take precautionary measures, and this brings us to the next step on how to use stochastic indicator. Step #3: Wait for the Stochastic %K line (blue moving average) to cross above the 20 level. We want to trade smarter, right? Well, because the %k is the fast moving average it’s enough just to wait for it to cross above the 20 level because the %D line will follow suit. We don’t want to wait too much either as this will result in reduced profit margin. Right now is the time you should switch your focus to the price action, which brings us the next step of the best stochastic trading strategy. Step #4: Wait for a Swing Low Pattern to develop on the 15-Minute Chart.

What is a Swing Low Pattern ? A Swing Low Pattern is a 3 bar pattern and is defined as a bar that has one preceding and one following bar with a higher low. Here is how to identify the right swing to boost your profit. A visual representation of the Swing Low pattern can be seen below: So far, so good, but still we haven’t answered the most important question that a trader has: Day trading stochastics: When to Enter? This brings us to the next rule of the Best Stochastic Trading Strategy. Step #5: Entry Long When the Highest Point of the Swing Low Pattern is Broken to the Upside. Nothing beats an illustration… So, after following the rules of the Best Stochastic Trading Strategy , a buy signal is only triggered once a breakout of the Swing Low Patterns occurs. Let’s turn our focus again to the EURUSD 15-minute chart presented earlier and see how to use stochastic indicator in combination with the Swing Low Pattern . See chart below: So at this point, your trade is running and in profit.

Step #6: Use Protective Stop Loss placed below the most recent 15-minute Swing Low. You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5 pips away from the low, to protect yourself from possible false breakouts. Step #6: Take Profit at 2xSL. Knowing when to take profit is as important as knowing when to enter a trade. The Best Stochastic Trading Strategy uses a static take profit, which is two times the amount of your stop loss. See figure below: Note** The above was an example of a buy trade using the Daytrading with the Best Stochastic Trading Strategy. Use the same rules – but in reverse – for a sell trade. In the figure below you can see an actual SELL trade example using the Best Stochastic Trading Strategy. We’ve applied the same Step #1 through Step#4 to help us identify the SELL trade and followed Step #5 to trigger our trade (see next figure). Conclusion for this stochastic strategy: Day trading with the Best Stochastic Trading Strategy is the perfect combination between how to correctly use stochastic indicator and price action. The success of the Best Stochastic Trading Strategy is derived from knowing to read a technical indicator correctly and at the same time make use of the price action as well.

We also have training for the best short-term trading strategy. Our team at Trading Strategy Guides. com doesn’t claim to be perfect, but we have a solid understanding of how the market works. For those of you who are not fans of lower time frames, we recommend the “Fibonacci Retracement Channel Trading Strategy” which can be more suitable for your trading style. Thank you for reading! Please leave a comment below if you have any questions about Stochastic Trading Strategy! Also, please give this strategy a 5 star if you enjoyed it! ( 7 votes, average: 4.43 out of 5) Here is a quick video of the strategy: Please Share this Trading Strategy Below and keep it for your own personal use! Thanks Traders! 4 Simple Slow Stochastics Trading Strategies. Table of Contents. Slow Stochastic Definition. The slow stochastic indicator is a price oscillator that compares a security's closing price over "n" range. The most commonly used range for the slow stochastic indicator is 14. The slow stochastic formula is calculated as follows: Bonus: Download the free Tradingsim day trading ebook with over 10,000 words of trading strategies and techniques you can use to trade stocks, futures and bitcoin! Slow Stochastic Formula. To calculate the slow stochastic, replace "n" with the range your are monitoring. If you plan on using 14, you will want to find the highest and lowest values over the last 14 trading bars.

The slow stochastic can be calculated on any time frame. While I have provided the equation for calculating the slow stochastics so you can see "under the hood", I strongly advise you to just use the indicator as provided by your trading platform. Please do not pop out excel and start cranking through slow stochastics calculations using raw market data. Misconceptions of Slow Stochastics. Divergence in Slow Stochastics and Price Trend. Traders will often cite when a stock makes a higher high, but the stochastics does not exceed its previous swing high, that the trend is in jeopardy. This couldn't be the furthest thing from the truth. The slow stochastics indicator ranges from 0 - 100. So, as a stock rallies, how can the stochastics continue to make higher highs if it hits 98.85? Unlike price which has no boundaries, the slow stochastics is an oscillator, so it will never truly mimic a security's price action. All that matters is that the stochastics continues in the direction of the primary trend. Oversold and Overbought Levels.

Traders will often exit long trades when the slow stochastics crosses over 80 or will buy when the slow stochastics crosses under 20. The problem with this trading methodology is that if a stock is over 80, it should not be looked upon as overbought, but rather as trending strongly. Also, if the slow stochastic is below 20, this is a sign of weakness and without any other form of support present, the stock will likely continue lower. How to trade the slow stochastics profitably. Below are 4 trading strategies you can use when trading the slow stochastics. The strategies increase in complexity as we progress through each example. Please approach each strategy with an open mind as this will challenge the conventional thinking of how to use the slow stochastics indicator. Strategy #1 - Identify stochastics with smooth slopes. Stochastics that have smooth slopes, which move from overbought to oversold implies that the move down was sharp and without much reaction, thus strengthening the odds of a counter move up. Slow Stochastics Buy. While this is the simplest of slow stochastics strategies, it has its flaws. For starters, sharp moves up or down can start consolidation patterns prior to continuing the trend. If you were to simply place buy and sell signals because the of smooth slow stochastic slopes, you are headed down a rough road. Still not a believer, let's review a few charts. AMZN Drifting Lower.

Weak Slow Stochastics Buy Signal. After you get a few of these under you belt, take my word you will realize that you need more than a slow stochastics move where the fast line never crosses the slow line on the way down. While this strategy is the simplest, it doesn't mean easy profits. You will need to step it up a little on the analysis side of the house, if you want to make long sustainable profits. Strategy #2 - Follow the Sloppy Stochastics. Far to often new traders will buy oversold slow stochastic readings blindly. Remember, the slow stochastic is an oscillator and like any other oscillator, it can trend sideways for an extended period of time. Slow Stochastics False Signal. You will see the slow stochastics just sitting beneath the 20 line and you will say to yourself, this has been going on for too long. Trust me, you say you won't, but you will. This is the downside of indicators, it will give the impression that price action has to change course; however, all of us seasoned traders knows the market will do whatever it wants. Let's walk through a few working examples to get this point across. Flat Slow Stochastics.

Choppy Slow Stochastics. In each of the above charts of Facebook and Apple you can see how the slow stochastics just began to flat line. Mixed with emotions of needing to jump the market and the need to put on a trade, it's very easy to see how a trader can end up making a poor trading decision. In both instances, the rally never materialized and in addition to losing money, you are also losing time sitting in the position. So, where does this leave us? The simple answer is that you can take a position in the direction of the primary trend. For example, as you see the slow stochastics in Apple begin to stay under 20, use this as an opportunity to take a short position to ride Apple all the way down. Going in the direction of the sloppy slow stochastics will feel very strange at first. This emotion will be the normal human reaction that states something has to give and things can't keep going lower. At this exact moment, you need to fight the need to go counter to the trend and realize that the money is in the least path of resistance. Strategy #2 has a higher difficulty level then trading smooth slopes; however, it still lacks the context of the full technical picture of a security.

Strategy #3 - Combine the Slow Stochastics with Trendlines. As we just mentioned earlier in the article, the slow stochastics can provide a number of false signals. The best way I have determined to over come this flaw is to combine the slow stochastics with trendlines to identify proper entry and exit points. Slow Stochastics Buy Signal. The above image is a 5-minute chart of Apple. You can see how as Apple goes through its corrective move lower, it hits a support trendline twice and bounces higher. You will also notice the slow stochastics had a number of moves below 20 that either resulted in lower prices or sideways action. This is why as a trader you cannot blindly buy a stock just because the slow stochastics is under pressure. If you use the confluence of the stock hitting support in conjuction with a bottoming slow stochastic, then you are likely entering the trade at the right point. It may look like magic, but it's really not that complicated. The mechanics of the situation are such that the trend traders are buying as Apple hits support, at the same time the stochastics traders are buying the oversold reading.

The key to this game is buying and selling right before everyone else does. If you have a way of identifying when multiple players will be taking the same action for various reasons, you my friend are ahead of the curve., This same approach for identifying buying opportunities works exactly the same on the sell side. Slow Stochastics Sell Signal. The next chart is of Google and as you can see the stock was trending higher nicely. As the stock hit resistance for the third time, Google also had a slow stochastics reading of over 80. Just as I mentioned earlier about the false buy signals, look at the number of false sell signals. Beyond missing out on trading profits, allowing the indicator to whipsaw you like this would also rack up pretty hefty trading commissions. Now, I do not want to leave you with the impression that you can simply buy or sell a stock when (1) it is hitting a trendline and (2) going over 20 or above 80. Trading is not that simple. You can however utilize the slow stochastics to validate the health of a trend relative to previous peaks by seeing if the stock was able to make a higher or lower slow stochastics reading.

This way you can size up a recent high relative to its predecessor to determine if its really time to sell or if the stock still has room to go, regardless if a trendline is staring you in the face. Strategy #4 - Pull the Trigger After the Slow Stochastics Crosses a Certain Threshold. Anyone on the web can figure out after reading the first 3 Google results that traders should be when the slow stochastics crosses above 20 and sell when the slow stochastics crosses below 80. So, if everyone can read this on the web, why do you think this approach will make you money? Another approach is to allow the slow stochastics to cross above a certain threshold to confirm that the counter move has in fact begun. This level could be 50, 61.8, 78.6, etc. The downside to this approach of course is that the move is likely to have a few points behind it before you enter the trade. On the flip side, this will prevent you from getting caught in a stock that is flat lining. OAS Slow Stochastics. To illustrate this example, I will be using 61.8 as the trigger for entering any new long positions. This is of course a play on the 61.8% fibonacci level found throughout the market. In the above chart we see that the stock OAS crosses above 61.8 on the slow stochastics which confirms the move up. From this point, OAS has an. 4 percent up move before finally topping out. The key with using a higher slow stochastic reading prior to entering a buy signal is to use this method for fading morning gaps down. The reason this approach works well is it allows for you to validate the initial gap down is weakening and you can take a long position. If you were to go in the direction of a strong up trend and wait until 61.8 was crossed, you would likely be buying at the peak. This approach also works well in the late afternoon trading session. Those that follow the Tradingsim blog know that I personally do not trade in the afternoon; however, strategy #4 was built for late day setups.

Later in the day, the market has less volume and well experience a number of false breakouts relative to the first hour of trading. To this point, as a day trader, you will need a method for assessing which breakouts or moves are valid. As always, a real-life example is worth a thousand words. Slow Stochastics Late Day Breakout. Notice how in the CLF example the stock had an expected retracement after the morning pop. Once CLF cleared 61.8 the stock went on a nice run up until 2:30 pm. By waiting on the slow stochastics to confirm the breakout in conjunction with the trendline break, you are allowing both the price action and technicals to confirm the start of a new uptrend. The slow stochastics is a great indicator for identifying the primary trend. If you take it a step further and combine some basic technical analysis methods such as trendlines, you will be able to uncover some hidden trading opportunities in the market. Let’s Improve Your Trading Performance. TradingSim accelerates the steep learning curve of becoming a consistently profitable trader by allowing you to replay the market as if you were trading live today, for any day from the last 2 years – it’s really a trading time machine. To see how Tradingsim can help improve your bottom-line numbers, please visit our homepage.

Pick The Right Settings On Your Stochastic Oscillator (SPY, AAL) The Stochastics oscillator, developed by George Lane in the 1950s, tracks the evolution of buying and selling pressure, identifying cycle turns that alternate power between bulls and bears. Few traders take advantage of this predictive tool because they don’t understand how best to combine specific strategies and holding periods. It’s an easy fix, as you will see in this quick primer on Stochastics settings and interpretation. (See also: An Introduction To Oscillators ). Stochastics Construction. The modern or "Full Stochastics" oscillator combines elements of Lane’s "slow stochastics" and "fast stochastics" into three variables that control look back periods and extent of data smoothing. (To learn more, read: What is the difference between fast and slow stochastics? ) Fast K% - measures the closing price compared to specified lookback periods. Full K% or K% slows down Fast K% with a Simple Moving Average (SMA). Full D% or D% adds a second smoothing average.

Lower Fast K%, K% and D% variables = a shorter-term lookback period with less smoothing Higher Fast K%, K% and D% variables = a longer-term lookback period with greater smoothing. Picking The Best Settings. Choose the most effective variables for your trading style by deciding how much noise you’re willing to accept with the data. Understand that whatever you choose, the more experience you have with the indicator will improve your recognition of reliable signals. Short-term market players tend to choose low settings for all variables because it gives them earlier signals in the highly competitive intraday market environment. Long-term market timers tend to choose high settings for all variables because the highly smoothed output only reacts to major changes in price action. (For related reading, see: Stochastics: An Accurate Buy and Sell Indicator ). SPDR S&P 500 Trust (SPY) shows different Stochastics footprints, depending on variables. Cycle turns occur when the fast line crosses the slow line after reaching the overbought or oversold level. (As outlined in: Use Weekly Stochastics To Time The Market Effectively ). The responsive 5,3,3 setting flips buy and sell cycles frequently, often without the lines reaching overbought or oversold levels. The mid-range 21,7,7 setting looks back at a longer period but keeps smoothing at relatively low levels, yielding wider swings that generate fewer buy and sell signals. The long-term 21,14,14 setting takes a giant step back, signaling cycle turns rarely and only near key market turning points. Shorter term variables elicit earlier signals with higher noise levels while longer term variables elicit later signals with lower noise levels, except at major market turns when time frames tend to line up, triggering identically-timed signals across major inputs. You can see this happen at the October low, where the blue rectangle highlights bullish crossovers on all three versions of the indicator.

These large cycle crossovers tell us that settings are less important at major turning points than our skill in filtering noise levels and reacting to new cycles. From a logistical standpoint, this often means closing out trend following positions and executing fading strategies that buy pullbacks or sell rallies. (For more, see: What are the best indicators to identify overbought and oversold stocks? ). Stochastics and Pattern Analysis. Stochastics don't have to reach extreme levels to evoke reliable signals, especially when the price pattern shows natural barriers. While the most profound turns are expected at overbought or oversold levels, crosses within the center of the panel can be trusted as long as notable support or resistance levels line up. Moving averages, gaps, trendlines or Fibonacci retracements will often intercede, shortening a cycle’s duration and flipping power to the other side. This highlights the importance of reading the price pattern at the same time you interpret the indicator. (To learn more, read: Introduction To Technical Analysis Price Patterns ). American Airlines Group (AAL) rallied above the 50-day EMA after a volatile decline and settled at new support (1), forcing the indicator to turn higher before reaching the oversold level. It broke out above a 2-month trendline and pulled back (2), triggering a bullish crossover at the midpoint of the panel. The subsequent rally reversed at 44, yielding a pullback that finds support at the 50-day EMA (3), triggering a third bullish turn above the oversold line. (See also: Strategies & Applications Behind The 50-Day EMA ). The Bottom Line. Many traders fail to tap into the power of Stochastics because they are confused about getting the right settings for their market strategies. These helpful tips will remedy that fear and help unlock more potential.

MACD + Stochastic + RSI. "Basic is the best" I pound to present my system, which I've been using MACD, Stochastic and RSI in 1H, 4H and 1D chart. If all signal in every chart show same signal that can verify and you can open your order with confidencially. after that wait for profits. Good luck for you and me . If you interest, you can download my template and indies. Visit my blog daily analysis. Finally, I hope your about this. Thanks, friends. Could you give details of your system? please explain ur system. setup&MM. Basically all you have said is "use 3 indicators and 3 timeframes and you'll make money." Oops, that's not a trading system, and you've posted in the "Suggestions for Trading Systems" section. So, could you give us your trading system please?

pict from link (first post) Asepticme, after sertain amount of posts it'll let you upload attchements. (forums regular untispam mesures) if you worked it as the system (not just general method) - could be interesting. everything's cool. but. SL where are you ?! be careful with no using SL. Here my simple Trade.. 1. Exponential moving average 50. 4. Stochastic Oscilator ( 10 5 5) 5. Daily Pivot Point. Trading rules Rules for Long trades. 1 The price should be above the 50 EMA. 2 MACD histogram should be above zero level. 3 RSI should be above 50 line. 4 Stoch should be above 50 line.

5 Entry is above support line or a broken resistance line. 6 Stop loss is below the closestnext support line. 7 Target is at nearest resistance line. Rules for short trades. 1 The price should be below the 50 EMA. 2 MACD histogram should be below the zero line. 3 RSI should be below 50 line. 4 Stoch should be below 50 line. 5 Entry is below resistance or a broken support line. 6 Stop loss is above the closestnext resistance line.

7 Target is the nearest support line. just 1 trade every day. yesterday i got $144 Live acc from EurUsd and GbpUsd. Full Stochastic Oscillator (Full STO) The combination of the Slow Stochastic and the Fast Stochastic is called a Full Stochastic . It uses 3 parameters: The uniqueness of Slow Stochastic is that it uses a "smoothing factor" for the initial %K line that is "n-period" SMA (n is the same number as the middle parameter) of the initial %K line. The Full Stochastic Oscillator is more advanced and more flexible than the Fast and Slow Stochastic and can even be used to generate them. For example, a (14, 1, 3) Full Stochastic is equivalent to a (14, 3) Fast Stochastic while a (12, 3, 2) Full Stochastic is identical to a (12, 2) Slow Stochastic. Much as the Fast and Slow Stochastics, the number of periods used to create the initial %K line, is defined by the first parameter. %D is again the number of periods that is used to create the signal line. Readings above 80 act as an overbought signal while readings below 20 act an oversold signal. However, even if the Stochastic Oscillator has reached 80 securities can continue to rise. Similarly, even after it has reached 20 it can continue to fall.

How to Use the Stochastic Indicator. The Stochastic oscillator is another forex chart analysis indicator that helps us determine where a trend might be ending. This simple momentum oscillator was created by George Lane in the late 1950s. Stochastics measures the momentum of price. If you visualize a rocket going up in the air – before it can turn down, it must slow down. Momentum always changes direction before price. The 2 lines are similar to the MACD lines in the sense that one line is faster than the other. How to Trade Forex Using the Stochastic. As we said earlier, the Stochastic tells us when the market is overbought or oversold. The Stochastic is scaled from 0 to 100 . When the Stochastic lines are below 20 (the blue dotted line), then it means that the market is oversold. As a rule of thumb, we buy when the market is oversold, and we sell when the market is overbought. Looking at the currency chart above, you can see that the indicator has been showing overbought conditions for quite some time. Based on this information, can you guess where the price might go? If you said the price would drop, then you are absolutely correct! Because the market was overbought for such a long period of time, a reversal was bound to happen. Many forex traders use the Stochastic in different ways, but the main purpose of the indicator is to show us where the market conditions could be overbought or oversold.

Over time, you will learn to use the Stochastic to fit your own personal forex trading style. Slow Stochastics versus Fast Stochastics. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk. Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets. We'll email you login details shortly. You are subscribed to Richard Krivo. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form.

Please try again later. Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is a momentum indicator that shows the location of the current close relative to the highlow range over a certain number of periods. New traders typically want to know the difference between Fast Stochastics and Slow Stochastics. They also want to know whether the typical default settings of 5,5 (Fast Stochastics) or 5,5,5 (Slow Stochastics) as seen in most charting packages developed for FX are better or worse than the typical default settings of 14,3 (Fast Stochastics) or 14,3,3 (Slow Stochastics) seen in stock and futures charting packages. First of all, the difference between Fast Stochastics and Slow Stochastics is just a moving average. When calculating Fast Stochastics using the values of 5 and 5, the first “5” is the raw value for Stochastics, while the second “5” is a 5-period moving average of the first “5”. When using Slow Stochastics, the first two 5’s are the same as with the Fast Stochastics, with the third “5” being a moving average of the second “5”. Yes, that’s right, a moving average of the moving average. This slows the movement of the indicator down even further, hence the name of Slow Stochastics. By slowing the movement of the indicator down, we will see fewer signals to buy or sell on the chart, but they should be more reliable signals. By using a larger value in calculating the raw value of Stochastics, we slow the indicator down even more. This is why I recommend to traders using FX charts to use the Slow Stochastics with values of 15,5,5. This combination offers fairly reliable signals that can offer solid entries into trading opportunities. The chart below shows the difference between Fast Stochastics with values of 5,5 compared to Slow Stochastics with values of 15,5,5. You can see how much easier it is to identify the signals using the Slow Stochastics . Being able to use the technical tool effectively is most of the battle. By keeping things simple and consistent, we should start to see consistent results in our trading.

As with all indicators, entering a trade only when the indicator generates an entry that is in the direction of the trend can result in a higher probability of success. Interested In Our Analyst's Best Views On Major Markets? Check Out Our Free Trading Guides Here. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.



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