How to trade with an oscillator

[Smart_trade]

ST Da,

I am trying to exactly do that .

Hourly charts, 5/13 EMA and the Stoch.
Entries and Exits same as that of Pride's method, start with minimum 2 lots [or to say 2X the lot size].
Exit 1 lot [2X/2 lot size] on a Stoch crossover in the Overbought/Overshold zone and hold the other lot with a tight-trailing-SL.
Re-enter [1 lot] when the stoch crossovers and the EMA shows a continuous trend.
Most of the times we would end up holding 1Xlot and on reversals/re-entires hold 2X lot.

I am testing this method for the current month's miniNF series. Please do let me know if you have any suggestions.

Regards,
-Sri

Hello Sri....

The idea is promising....preliminary study of chart and oscillator shows that it should work....however needs more back and forward testing....hourly charts have a tendency to stay in OB/OS zone for extended periods of time.....we need to tackle this with oscillator qualifiers...

Smart_trade

 

[winstonn]

Hi Smart Trader,

I never trusted on oscillators, i trade on pure price and volume patterns,
but this is the first time in my trading life that you have showed me another perspective on oscillators.....:thumb::clap:

waiting to learn a lot from you!

thanxs for your sharing!

With BestWishes,
Winston

 

[winstonn]

Hi ST,

please see the below chart for nifty cash 5min.


Long TRade

1) oscillator stays for only 4 bars in OS zone
2) Long above the high of upclose


Short trade
I have marked
1)negative divergence
2) after ND, the oscillator remains in OB zone for only one bar
3) The low of Downclose is cracked and we go short


Brown marked zones where 6 qualifiers not meet!

Am i right? please correct !

Regards,
Winston

 

[boboinuk]

Hi,
Kindly explain what you mean by "not met"
Cheers.

 

[Smart_trade]

Hi ST,

please see the below chart for nifty cash 5min.


Long TRade

1) oscillator stays for only 4 bars in OS zone
2) Long above the high of upclose


Short trade
I have marked
1)negative divergence
2) after ND, the oscillator remains in OB zone for only one bar
3) The low of Downclose is cracked and we go short


Brown marked zones where 6 qualifiers not meet!

Am i right? please correct !

Regards,
Winston

Hi Winston,

The examples shown are perfect.....you have understood and grasped the underlying principle.....very well done...

Yes you are right,trading on oscillators has a major problem that in periods of strong trends the oscillator remains in OB/OS region for extended period of time and one tends to trade against the underlying strong trend....the strong OB/OS condition of the market needs to get dissipated by coming into neutral territory and again going into OB/OS region and staying for less than 5 bars....this needs to happen 1-2 times before market trend comes to an end...in the process we get divergences and actually divergences are not the cause but effect of such OB/OS condition....

Note that the qualifiers not only keep you out of trouble most of the time but they also warn you for strong market action and new tops/bottoms in case of extreme OB/OS conditions.

The OB area marked in the brown (on 13th) I am not able to see qualifiers not met...it looks that it has touched OB zone and is there for less than 5 bars....so I guess it will meet all the qualifiers....Am I missing something here ?

Best Wishes,

Smart_trade

 

[Smart_trade]

Hi,
Kindly explain what you mean by "not met"
Cheers.

Hi friend....,

Which post are you referring to ? Please specify so that I will understand the context and can reply your post....

Happy trading....

Smart_trade

 

[Smart_trade]

Hi Smart Trader,

I never trusted on oscillators, i trade on pure price and volume patterns,
but this is the first time in my trading life that you have showed me another perspective on oscillators.....:thumb::clap:

waiting to learn a lot from you!

thanxs for your sharing!

With BestWishes,
Winston

Thanks for the kind words ,though I dont deserve these...Winston,

The credit entirely goes to Thomas DeMark,who painstakingly developed these qualifiers....I am only applying these to our markets....

Happy Trading....

Smart_trade

 

[winstonn]

HI ST,

please see these three live setups

1) IDFC 5min long long qualified

2) BombayDyeing 15min long qualified

3) Maruti 20min short qualified

please let me know whether it is right according to you! waiting for your reply!

Regards,
Winston

 

[Smart_trade]

HI ST,

please see these three live setups

1) IDFC 5min long long qualified

2) BombayDyeing 15min long qualified

3) Maruti 20min short qualified

please let me know whether it is right according to you! waiting for your reply!

Regards,
Winston

"Yes" on all three, Winston....

Happy trading...

Smart_trade

 

[Rajadhiraj]

Hi

On the system developed by Pride I have tried using a stop order to get into fast moves in anticipated direction. I have also came across a sys developed by you, which uses a 2 bar hi/lo for entry/exit signals, well dare I say it was tooo fast for me :lol:

Anyway that gave me few ideas, when i present it, you will see there is nothing original about them :rofl:

Concept 1:
On your 2 bar system , can we use the stoch on higher timeframe to filter trades (not sure about 30 Mins was thinking more like 15 mins), the entry/exit will still be 2 bar high/low

Concept 2:
This is very similar to Pride's system but without the EMA, also we add 1 more condition to avoid the multiple crosses on OB/OS conditions

Use the stoch on HTF 15 or 30 as the trade setup

HTF Bullish Condition = K > D and both > 40/30
HTF Bearish Condition = K < D and both < 60/70

Undecided/sideways = K > D but either of them is below 30 or K < D but either of them is above 70.

For entry we use the stoch on 5 mins with same conditions as above.

Will like to get your inputs for the above.

Thanks