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Thread: Indicator Stochastic

  1. #1
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    Indicator Stochastic

    Brief introduction of Indicator Stochastic : The Stochastic oscillator is a momentum indicator that was developed by George C. Lane in 1950’s. Due to its simplicity in use this indicator is common among traders. Traders can use the Stochastic mainly to pinpoint trend reversals.. This indicator being a momentum indicator can be used to judge when the market is gaining or losing steam in a particular direction.


    Viewing The Stochastic oscillator on the chart
    : The Stochastic oscillator consists of two lines.

    1. The indicator itself represented in Violet
    2. A signal line reflecting the three-day simple moving average (SMA) represented in green.

    When these two lines intersect it may signify that a trend shift may be about to happen.

    Attachment 12605


    Using The Stochastic oscillator in trading
    : Basically The Stochastic oscillator can show us the following two things in our trading

    1. A trend shift or reversal
    2. Overbought or oversold positions.


    1.How does The Stochastic oscillator show us a trend reversal or trend shift
    : We have already learned that the indicator consists of two lines. The indicator itself and a signal line. When these two lines intersect each other then that denotes a trend reversal is about to happen. For instance if the prices have been moving up and the two lines intersect then that can denote a future downtrend.

    In the below image we can see that prices of USDJPY fell when the two lines intersected each other.

    Attachment 12607


    2. How does The Stochastic oscillator show us Overbought and oversold prices
    : Stochastic is a momentum oscillator which can show us overbought or oversold conditions. Ranging from 0 to 100. Above the 80 level we can consider that the prices are overbought. Below the 20 level the prices can be considered as oversold.

    Attachment 12608

    Useful tip
    : A trader would not like to follow each and every signal that is given by an indicator. Our focus is always on taking the stronger signals and leaving the weak. Regarding the Stochastic we can simply take the crossovers that happen at the extreme levels. For getting better signals of trade shift or reversal we can consider the crossover of the two lines in the overbought or oversold range that is above the 80 or below the 20 levels.


    My opinion
    : This indicator has stood the test of time and have given good signals for major currency pairs. However this Indicator has also given false signals a couple of times. Success rate is good and we can use a stop loss to cut our losses at the time of false signals.Safety is priority as there have been never a magical indicator that has always given flawless signals.


    Setting the The Stochastic indicator on our terminal
    : While using the indicator we can leave the parameter settings as it is. Under colors you can chose simply what appeals you more. I have chosen violet and green. For levels I have chosen the white style. For visualization it is "all timeframes".

    Attachment 12609

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  2. #31
    Trader ara's Avatar
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    Quote Originally Posted by Abhishekwala View Post
    Safety is priority as there have been never a magical indicator that has always given flawless signals.
    I once collected hundreds even to a thousand indicators, all the same, no indicators that has always given flawless signals, if there are indicators that can provide accurate signals in all the times without false signals, then there are trader who always get profits in all trades with using those indicator, hehehe, in any case, safety is always a priority, not just in forex only.

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  3. #32
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    stochastic is a good indicator and can work well with any strategy and can be set for different setting to serve the style of trading and let the trader to trade better, it is a good indicator for the scalpers because it gives them a good and early signals and so they can open positions early at the beginning of the chance and make good money

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  4. #33
    Trader snnaky's Avatar
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    Quote Originally Posted by Hukam View Post
    Yeah mate there is a very simple way to use this indicator for getting signals, A good use of money management, risk management, stop loss and good understanding of market could give trader's a very good opportunity to make money with those 80 and 20 levels. I am not using stochastic but there is no doubt in it that it could be effective if we have good understanding of using it.
    [lang=ar]Thank you my friend.

    we all know that the indicators follow the price . i don’t prefer the trade through the indicators never , it follows the price and always make my decision far from the right but use the averages and support and resistance ,this is the most appropriate for me[/lang]

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  5. #34
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    stochastic can give fast signals if the setting is low and gives slow signals if the setting is high, the trader can use any of them or both of them to get better signals and confirmations, stochastic can be used for different trading styles and so the trader can be able to use it for his different methods of trading to make more money.

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  6. #35
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    No doubt mate there is an extremely straightforward approach to utilize this marker for getting signals, A great utilization of cash administration, hazard administration, stop misfortune and great comprehension of market could give broker's a decent chance to profit with those 80 and 20 levels. I am not utilizing stochastic but rather there is no uncertainty in it that it could be powerful on the off chance that we have great comprehension of utilizing it.

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  7. #36
    Trader jamey's Avatar
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    Yes, an easy way to use this index for getting a matching signal can be a very good way to earn money with the 80s and 20 levels due to good management of money, risk management, stop loss and good understanding of the market. I'm not using Stoxstick but it's no doubt that it can be useful if we feel better about using it.

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