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11-06-2011, 12:25 AM #1
Anyone Trade Soley Based Stochastics (OverSold & OverBoat)
Just like the title suggest, I was wondering if anyone has tried trading simply based on Stochastics. Pretty much buy when it's oversold in the below 20's area, and sell into the overbought conditions 80 or higher. I was watching a few trading videos on Youtube, and noticed a few people got into their trades as soon as Stochastics went oversold and sold into overbought conditions. Seems as though the William or %W is pretty much the same thing, offers overbought and oversold conditions. Thoughts, opinions, analyzable are all appreciated. If you suggest any other indicators for quick scalps, I'd appreciate those as well.
11-06-2011, 02:31 AM #2
Never have but will check out the vidoes..........what system do you use to trade?Current ride: 2013 991 C2/Platinum Silver/Black/Platinum Carrera S Wheels/Sport Design Wheel/Moonroof/PDK/Premium Pkg/Bose Sound/PDLS/Sports Chrono Pkg
11-06-2011, 03:47 AM #3Senior Member
- Join Date
- Sep 2011
- Sydney, Australia
Stochs are a funny thing... If you look at AUDUSD on its trip from 0.8600 to 0.9500 - 1.0000 (daily chart) you'll notice stochastics remained overbought for months... They never made a cycle down.
They're a lagging oscillator. I use them myself, but I'd neverrrrrr use them as my one and only. Ever. Another oscillator to look at is MACD. It's a pretty good tool to ''represent'' the overall mood of the market on a larger scale. Stochs for the smaller swings, and MACD for the longer term stuff.
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11-06-2011, 04:31 PM #4
^^^ Yeah been reading more about it, seems like it should be used more of a confirmation alongside RSI. It seems as though RSI does a better job, and you need to use the Stochastics to confirm the move, for more accuracy.
11-07-2011, 02:09 AM #5
it wont work consistenly.... stochastics is just an oscillator. its used to confirm only what the price action sees.
the thing is with stochastics....depending on the market cycle sometimes a stochasticks that stays above 80 for a long period is actually a sign of strength and can be a buy signal!
it also tends to work better in rane bound markets then momo markets. but its a nice tool! but just that a tool. use it to confirm and add probability to a setup but not as a buy/sell signalKunal Desai
11-07-2011, 04:10 PM #6
stochastics work nicely on bonds, but thats about it. Or for very short term scalps on fast markets. I have no experience with them on stocks however...
11-07-2011, 04:42 PM #7
I would never trade based solely on stochastics. As mentioned they are a lagging indicator. I use them only for confirmation..-
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11-08-2011, 05:28 AM #8
I got on RDN today, when the RSI went below 20, thinking it should bounce. I got in at $2.81. Sure enough it bounced 3Cents to 2.84 lol. Of course, not enough to even cover my commission with only 1000 shares. Ended up being a bag holder, on the stock and turned a +20 into a -60 and finally sold. Of course, check the stock on the way home, just to find out it went from 2.70 to 3.07 after hour.
The RSI at the $2.70 was nearly almost at 0 point, and the Stohastics was same lines. So I don't know, what I should pick up from that.
11-08-2011, 01:42 PM #9
probably nothing. might work a few times. but if thats all we had to do to trade we'd all be trillionaires! keep testing things sooner or later you will find a system that works for you. there are 10000 methods that work. but 0 indicator based methods that will work. but used in conjunction with price there can be some advantagesKunal Desai