How to trade with an oscillator

Ashwani,

This happens because MACD by its very nature of construction is a trending market indicator whereas Stochastics or RSI are oscillators meant for trading / sideways markets. So they are bound to be in disagreement at the market turns.

How I handle this is I use Stochastics or RSI as a set up indicator...so when they are in OS area for less than 5 bars or they are exhibiting positive divergence, I get on my pivot based trend indicators and make entry and keep stoplosses as per the charts....I dont use MACD as I find my price action methods give me more early and definite entry signals.....

Hope the above answers your question...

Smart_trade
yes that is what i wanted to ask from you,basically recently i removed all indicator which were rsi and stoch and converted my system just based on price action.and i am just using support and resistance ,for all my entry and exit decisions.but very rarely ,some time taking help of rsi or stoch for second view.but every thing on eod now and i am more comfortable now by removing indicators from my mts
thanks
 

rangarajan

Well-Known Member
This thread is completing its 1000 posts. The thread was started when I saw someone making observations on OB/OS markets and interpreting the excessive OB/OS incorrectly . So started this thread and the thread rolled on.....

I am extremely thankful to all the participants who participated wholeheartedly, asked questions, discussed various issues and supported sharing/ learning. I too learnt a lot from this thread and it has been a wonderful journey all along....
Thanks everyone...you all made this thread so lively....
Smart_trade
Congrats Smart for starting & Sharing this wonderful thread.
But for your Magnanimity in sharing your Hard earned knowledge and attaching NO importance to the materialistic returns,this thread would not have become popular.

I assure you that we have immensely benifitted.

Best Wishes & Best of Luck in yr future endeavors as well
 

rangarajan

Well-Known Member
Ashwani,

This happens because MACD by its very nature of construction is a trending market indicator whereas Stochastics or RSI are oscillators meant for trading / sideways markets. So they are bound to be in disagreement at the market turns.

How I handle this is I use Stochastics or RSI as a set up indicator...so when they are in OS area for less than 5 bars or they are exhibiting positive divergence, I get on my pivot based trend indicators and make entry and keep stoplosses as per the charts....I dont use MACD as I find my price action methods give me more early and definite entry signals.....

Hope the above answers your question...

Smart_trade
Dear Smart,

No market is going to tell me,well i am going to Trend now or consolidate & use appropriate indicators/Oscillators.
So,is there any thump rule by which Oscillators could tell us ,the mkt is trending or consolidating.

Or,whether we could consider yr above 5 bar setup as thump rule.
 

rangarajan

Well-Known Member
yes that is what i wanted to ask from you,basically recently i removed all indicator which were rsi and stoch and converted my system just based on price action.and i am just using support and resistance ,for all my entry and exit decisions.but very rarely ,some time taking help of rsi or stoch for second view.but every thing on eod now and i am more comfortable now by removing indicators from my mts
thanks
Dear Ashwani,
While yr queries are most welcome since we all benefit from the interaction with smart,i understand that Price action system is unique & requires lot of expertise to interpret it.But suits very well for intraday.
If u have exploited it & if u have no inhibition to share yr expertise,i will be obliged ,perhaps by a new thread also.
 
Just to add one small comment that would help Rangarajan.

Many times newbies come to forums like this one looking for that Magic Answer. There are none. All good traders did not wave a magic wand and there was the answer. None had any inside information.
Murthyavr said in this post, "Find it out and stick to it!" The question is now is, "How do you do that?"
Practice. Demo trading. Plotting them on your charts and watching how they operate in real time. This all takes an investment of time, and in most cases, lots of it.

Rangarajan,

Timepass has not told you anything new.. He also reiterated the statement
of ST, who stated that the settings need a review once in 2-3 months because
of the changing nature of the cycles.

In any given situation, more than one set of settings will definitely be working.
Despite the fact that they are working alright, a personal preference gets
added to the set, depending on the risk/psychological profile of the trader.
It follows that ST is right now comfortable with 8-3-4, Paul with 5-5-5, me
with something else.

What are you comfortable with? Find it out and stick to it!

But.. keep reviewing it, whether it has been uniformly comfortable for you
over a period of time.
 


Ashwani, there are many times when the crossover has to be anticipated, in lieu of the other parts of your methodology.
This chart is a weekly of the USD/CHF. There was an OB condition that preceded the 3 black candles. I took that short position before the stochastics crossed. It was near the top of the 1st black candle. The reason I did that was the candle was under a fresh cloud after traveling a long way, so I knew it was wore out. The SD channel line at the time crossed under the cloud, which added to the optimization of the entry. All that was done while anticipating the cross of the OB condition on the stochastics.

Here's the next thing to look for on this market of the anticipatory nature. If I get a daily cloud around .9210, then I will anticipate the cross of the stochastics, which would form a divergence, which is a hot topic for a lot of people.
If you notice how far apart the signal and value lines are, the pair will have to fall deep before the trade would be made if you are waiting for the cross. This is why a confluence has to be used and then anticipate what your oscillator will do.


dear smart trade ,i do have one query,my experience taught me,that you can not match signals given by macd and rsi,by using their default value.all the time both will be speaking their own language.
by the time macd will say go long,with the help of rsi we have covered half the long distance
by the next time macd will say go long ,rsi will say close your long and go short
how you manage to fit macd with rsi-both which will never speak same language.
what methodology you use to over come with these conflicting attitude of the two most popular indicator. and take one decision from them thanks in advance
 
Last edited:
Smartrade, your personal knowledge along these lines,your willingness to share, and acceptance of others new ideas has also made this thread a very worthwhile stop.


This thread is completing its 1000 posts. The thread was started when I saw someone making observations on OB/OS markets and interpreting the excessive OB/OS incorrectly . So started this thread and the thread rolled on.....

I am extremely thankful to all the participants who participated wholeheartedly, asked questions, discussed various issues and supported sharing/ learning. I too learnt a lot from this thread and it has been a wonderful journey all along....

Thanks everyone...you all made this thread so lively....

Smart_trade
 

rangarajan

Well-Known Member
Just to add one small comment that would help Rangarajan.

Many times newbies come to forums like this one looking for that Magic Answer. There are none. All good traders did not wave a magic wand and there was the answer. None had any inside information.
Murthyavr said in this post, "Find it out and stick to it!" The question is now is, "How do you do that?"
Practice. Demo trading. Plotting them on your charts and watching how they operate in real time. This all takes an investment of time, and in most cases, lots of it.
I feel sad that some of u have not taken my post in the right spirit & perspective.Everyone is entitled for his opinion.
The purpose of posting Healthy ,Constructive & Provocative posts are to elicit more positive & useful discussion.This is similar to the leading question of a lawyer put to his witness.
 
Okay, I'll take it you don't think it was constructive. So, tell me what I can do to improve on the post, but let me also make some clarity.

I did not mean to imply that you are a newbie. If you are or are not, I was only trying to address one comment.
I did mean to be constructive when I hope I implied correctly that it takes work and time to develop a system.

Let me make one more point. The responses to you, as I read them, have been helpful and constructive. But, if it is me that you think the post was useless, then please tell me, then we can work on it.

I assure you my desire, as well the others that I have intuited, are to be of a help and service.


I feel sad that some of u have not taken my post in the right spirit & perspective.Everyone is entitled for his opinion.
The purpose of posting Healthy ,Constructive & Provocative posts are to elicit more positive & useful discussion.This is similar to the leading question of a lawyer put to his witness.
 

EagleOne

Well-Known Member
Pips, Rangarajan and all

This thread has always been a classroom of a sort, which I respect deeply. It has a ordered flow of its own. And I would like to see it keeping this way.
As it is a public forum, I can't force you to stop posting non-contextually. All I can do is to request you guys to tone down. There is no need to turn it into a free-for-all kind of thread. Thank you.

P.S. No need to reply this post.
Please Mod, remove this post if it hinders the thread's flow in any way.
 

Similar threads