How to trade with an oscillator

[rangarajan]

Rangarajan,

You are missing the following :

1) The area you marked is a second time the oscillator went into OB region and stayed for 5 bars. First time it went before that was at 12:25 bar and stayed there for 7-8 bars, then came to neutral area and again went to OB zone and stayed for 5 bars....if you had bought anywhere in the first zone, you would have made money....but also appreciate that market cannot remain in OB zone indefinately.......after 2 or 3 zones and staying in OB it gets tired out.....

2) Buying in the dips means buying once the fall is over, which is confirmed by taking out a bar's high or a pivot high......none of the two happened...and the market went into OS area nullyfying the effect of excessive OB area.

3) See the earlier chart examples carefully....whenever the market goes in OB area and stays there for > 5 bars, you will get a shallow pullback to sideways movement if the market has to go to a new high and not a deep fall like we had today in ICICI......the fall was so deep that the oscillator went into OS zone......this case is NOT a right case for buy the dips....

Trading is an art. It is never an exact science....we have some templates to guide us in our journey but we should not stretch it too much......

Smart_trade

Thank you Smart.
Message well taken for future trade.

Incidentally,JSWSteel two days back,traded at O/B zone,above five bars,three times,making New High everytimePerhaps rare case.

As u rightly say,trading is not a science or maths & only propablity.
But this method is really good if one has patience & conviction.

 

[sunny_cool]

Hi ST,

Can you please tell me the best setting for EOD?...as i read first 20 pages...i come to know about 8,3,4 settings...Is it good?...or is there any other set of settings that i should try to get one for me... Please guide

Regards,
Sunny

 

[rangarajan]

Dear Smart,
I request one more clarification w.r.t.yr above reply.

a) Which Bar High should be taken out
b) Pivot High - r u referring to pivot high made when the stock was in o.b zone.If so ,the tgt may be meagre which of course may be better than loss but entry may be late.Cant we enter when Pivot low is formed which in this case would have resulted in loss.

 

[4xpipcounter]

Sunny, IMO, the best answer to the question is through personal observation. That was how I developed the 5,5,5 as being best for me. Even though it is 7 1/2 years later, I am right now experimenting with and closely observing the 9,3,4. I noticed a few in this forum had been using it, so I'm experimenting it to see if it might be better than the 5,5,5. Anything to gain an additional edge on the markets.
LOL, I don't like to play fair. I like to have all the odds in my favor.

Hi ST,

Can you please tell me the best setting for EOD?...as i read first 20 pages...i come to know about 8,3,4 settings...Is it good?...or is there any other set of settings that i should try to get one for me... Please guide

Regards,
Sunny

 

[praveeniitkgp2]

Hi ST

how will you trade this divergence....this is negative hidden divergence right?.....so it supposed to be go down but it went up......plz help


Thanks

 

[Smart_trade]

Hi ST

how will you trade this divergence....this is negative hidden divergence right?.....so it supposed to be go down but it went up......plz help


Thanks

I trade only normal divergences....positive or negative...they coupled with 5 bars, qualifiers give me enough trades. I consider divergences as an advance warning that reversal may be coming....but I take all my trades on confirmation on price action, pivots,consolidations, tests,breakouts, failures....also the stops on the price bars. I use oscillators like Stochastics ans RSI for profit booking along with other techniques like Alike bars,TDST,set ups ,hammers,supp/resist etc.

For me the most important is price action. All other things are secondary. It is the price which is the king in the markets.

Smart_trade

 

[Smart_trade]

Dear Smart,
I request one more clarification w.r.t.yr above reply.

a) Which Bar High should be taken out
b) Pivot High - r u referring to pivot high made when the stock was in o.b zone.If so ,the tgt may be meagre which of course may be better than loss but entry may be late.Cant we enter when Pivot low is formed which in this case would have resulted in loss.

Rangarajan,

Suppose you are trying to buy a dip and market makes 2-3 bars shallow downward movement, how will you know that the dip is likely to be over ? That is indicated when the last of the down bar's high is taken out.......

It is also possible to get a small pivot high in this downmove which if taken out gives an indication that the upmove which is the main trend is likely to resume and the downward correction is over.

Smart_trade

 

[sunny_cool]

Many thanks for your support 4x, can u please tell me how u come out with these figures? what all these three parameters signifies? just want to know the basics (taking a shortcut frm seniors experience ) So that i can try to generate my own or can go with seniors settings?

One more thing are you using these settings for intraday or interday?

Sunny, IMO, the best answer to the question is through personal observation. That was how I developed the 5,5,5 as being best for me. Even though it is 7 1/2 years later, I am right now experimenting with and closely observing the 9,3,4. I noticed a few in this forum had been using it, so I'm experimenting it to see if it might be better than the 5,5,5. Anything to gain an additional edge on the markets.
LOL, I don't like to play fair. I like to have all the odds in my favor.

 

[4xpipcounter]

Hi Sunny cool. Whew! It's more like the last part of your name in my area. It's -5C as I'm writing this.

%K is the faster of the 2 lines. Generally speaking, when the direction it crosses is the signal to initiate a position in that direction. It is the top number of the 3
%D is the slower of the 2, and it is the 2nd number of the 3
The 3rd number is nothing more than a moving average of %K.
I'm not clear on what the D and the K stand for.

The following are the formulas:
%K= 100*(C-Ln)*(Hn-Ln)
%D=100*Recent L-Lowest L (n) / Highest H (n)-lowest low(n)
C= close
L=low
H=high
n= the number you entered.

You can generate your own stochastic reading by entering the formula on your spreadsheet.

I use the same exact methodology with the exact settings on all my indicators on all TF's. I'm really boring along those lines, but it does help in consistency. I use 5,5,5 on the stochastics and 9,26,52 on the ichimoku.

Do not take my settings as being correct. They are only correct for me and my approach to the markets. Keep an open mind to other experience traders and the settings they use.
After you have witnessed posts by certain traders, and you have asked your questions and for them answered, at that point, you have just begun. It is now time for homework and for you to create your own convictions about your findings. Nothing is right concerning a methodology just because someone says so (Blanket statement here, not trying to be candid.). There are only 3 absolutes in trading, and no one can prove this wrong. You need:
1. To develop a methodology.
2. Money management skills.
3. Mental discipline

All of the above takes work. They are developed in that order. Without any one of the 3, there is only one word I know-- "failure".

You seem to be making good progress, Sunny. That is what I gather in reading your posts. Keep up the good work!

Many thanks for your support 4x, can u please tell me how u come out with these figures? what all these three parameters signifies? just want to know the basics (taking a shortcut frm seniors experience ) So that i can try to generate my own or can go with seniors settings?

One more thing are you using these settings for intraday or interday?

 

[sunny_cool]

Thankyou 4x for prompt reply & your effort helping others in such worse conditions
Thanks for boosting my morale also ...I m really feeling proud today after getting such comment from senior like u

For stoch, now I will also try ur settings & some other settings also & will post result

Hi Sunny cool. Whew! It's more like the last part of your name in my area. It's -5C as I'm writing this.

%K is the faster of the 2 lines. Generally speaking, when the direction it crosses is the signal to initiate a position in that direction. It is the top number of the 3
%D is the slower of the 2, and it is the 2nd number of the 3
The 3rd number is nothing more than a moving average of %K.
I'm not clear on what the D and the K stand for.

The following are the formulas:
%K= 100*(C-Ln)*(Hn-Ln)
%D=100*Recent L-Lowest L (n) / Highest H (n)-lowest low(n)
C= close
L=low
H=high
n= the number you entered.

You can generate your own stochastic reading by entering the formula on your spreadsheet.

I use the same exact methodology with the exact settings on all my indicators on all TF's. I'm really boring along those lines, but it does help in consistency. I use 5,5,5 on the stochastics and 9,26,52 on the ichimoku.

Do not take my settings as being correct. They are only correct for me and my approach to the markets. Keep an open mind to other experience traders and the settings they use.
After you have witnessed posts by certain traders, and you have asked your questions and for them answered, at that point, you have just begun. It is now time for homework and for you to create your own convictions about your findings. Nothing is right concerning a methodology just because someone says so (Blanket statement here, not trying to be candid.). There are only 3 absolutes in trading, and no one can prove this wrong. You need:
1. To develop a methodology.
2. Money management skills.
3. Mental discipline

All of the above takes work. They are developed in that order. Without any one of the 3, there is only one word I know-- "failure".

You seem to be making good progress, Sunny. That is what I gather in reading your posts. Keep up the good work!