3 Simple Steps to Make the Most Out of Stochastic Oscillators

A stochastic oscillator is a momentum indicator comparing the closing price of a security to its price range over a specific period of time. It is one of the earliest technical oscillators in securities trading used to predict future market direction.

‘Stochastic’ is the Greek word for ‘random’, and in the context of trading refers to using past actions to forecast a future state. The word ‘Oscillator’ refers to repetitive variations up or down the equilibrium position.

Below are 3 simple steps to make the most out of a stochastic oscillator you can use when trading the slow stochastic.

The strategies increase in complexity as we progress through each of the examples.

Therefore, it would be wise to approach each strategy with an open mind as they will challenge the conventional thinking of how to use the slow stochastic indicator when trading Forex.

Step 1 – Identify a stochastic oscillator with smooth slopes

Stochastics that have smooth slopes, which move from overbought to over sell, imply that the move down was sharp and without much reaction. This, in turn, strengthens the odds of a counter move up.

While this is potentially the simplest of slow stochastic strategies, it still 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 of the smooth slow stochastic slope, you are headed down a rough road.

Step 2 – The Pop Method

Another trading trick is the POP Method. The basis of this system is to enter long trades when the index goes above 70 and sell trades when it goes below 30.

Trades are closed when the stochastic crosses the overbought (for buy trades) or the oversold (for sell trades). This method performed well at the 70’s and 80’s and works even today on Forex pairs that trend strongly, such as the GBP/JPY.

Step 3 – Combine the slow stochastics with trendlines

As we just mentioned earlier in this article, the slow stochastics can provide a number of false signals. The best way I have determined to overcome this flaw is to combine the slow stochastics with trendlines in order to identify proper entry and exit points.

So, if you are looking to benefit from stochastic oscillators in your own Forex trading, I recommend that you try out the 3 steps above and see how your trading could improve.

Trustee Fees: How Much is Enough and How Much is Too Much?

I am often amused by the ads and offers I see concerning living trusts. Almost always, one of the big sales pitches is how a living trust will save th*usands of doll*rs in “nasty” probate fees. This leads the consumer to believe that you pay for probate, but living trusts are “fr*e.” (that is, after … Read More

How To Seduce Women – Top 10 Secrets for Wild Success

It’s one thing to know how to attract a woman. Any guy can get dressed up, style his hair nicely, and make a woman notice him. But how do you take the next step–SEDUCING a woman? What are the best ways for making her KEEP her eyes on you, for making her think of you … Read More

Quickest Ways to Make Money – Make Money Without Physical Labor

The quickest ways to make money may not at all be what you think. You’re probably thinking about doing something such as mowing grass for the neighbors, raking leaves, and shoveling snow. Although these are great ways to make money in very little time, there are plenty of other ways as well. First of all, … Read More

The Obstacles to Wealth Creation

Financial freedom is probably near the top of every person’s wish list. No one wants to spend his entire life working a job he doesn’t like simply because he needed the money. However, despite the unanimous opinion that this type of freedom is something to be sought after, majority of the people living today are … Read More

Stay Broke Not Poor

Stay broke! You heard me, stay broke but not poor. What is the difference? Broke is a temporary situation. Broke people have money they just misuse it. Poor is being destitute or lacking sufficient resources. I got this from Grant Cardone’s, The Millionaire Booklet. It also aligns with Dave Ramsey’s concept of naming every dollar. … Read More

How to Take Advantage of Business Travel Insurance

Depending on your kind of business, it may be necessary for you to travel, sometimes even out of the country, particularly if you hold a high position in your company. If you are in such a position, you should make sure that you take advantage of a business travel insurance. Perhaps you may wonder why … Read More

The Effects Of The Financial Crisis

The financial crisis is an ugly situation that no sane person would want to experience because it comes with very drastic results that can reduce wealth and standard of living. Unfortunately, recession is sometimes unavoidable. Unavoidable cases come as a result of bad government policies, unemployment, and unfavorable economic conditions. The good news is that … Read More

Finding A Millionaire Mentor To Help You Achieve Financial Independence

In order to reach ratified air and become a millionaire, I highly recommend you find yourself a millionaire mentor. Don not beat around the bush trying to find ways to become wealthy, instead find a millionaire mentor. Where do you find a millionaire mentor? Great question and I will address your important question. One of … Read More

The Quickest Way to Make Money on Earth

I am going to assume you don’t want to break the law or rob a bank, because as quickly as it could make you wealthy to rob your local casino, it is just not the right thing to do. I will also assume you don’t want to marry money or hope for a winning lottery … Read More

Page 3 of 31812345