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How to trade with an oscillator

Discuss How to trade with an oscillator at the Day Trading within the Traderji.com; Originally Posted by sibumajumdar Dear Sir, Iam fully confused with lines in point 3 of ...


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  #21  
Old 28th June 2009, 10:05 AM
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Default Re: How to trade with an oscillator

Quote:
Originally Posted by sibumajumdar View Post
Dear Sir,

Iam fully confused with lines in point 3 of Oscillator Entry Qualifier. Plz elaborate little more ---should not have stayed OB zone >5 Bars. If silly plz excuse me. Otherwise everything is comprehensible. BTW u deserve many many thanx for sharing ur keen observation. Thanx again.

SM
Hello SM

An oscillator is in the OB zone when the values are greater than some fixed level say 80 (some people may use other levels as 70 or 75), similarly it is said to be in over sold zone below 20/25/30


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  #22  
Old 28th June 2009, 11:02 AM
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Default Re: How to trade with an oscillator

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Originally Posted by Rajadhiraj View Post
Thanks Smart_trader for a great post :

The Oscillator Entry Qualifiers for a Long Trade are as under :
  1. The oscillator should have gone to oversold zone.

  2. Wait for a bar where the oscillator flips...ie comes out of oversold zone and comes in neutral zone....

  3. In doing step No 2 the oscillator should not have stayed in oversold zone for 5 bars and more

  4. Wait for an upclose ( meaning close more than earlier bar's close)

  5. Ensure that by that time oscillator does not go very near overbought region

  6. Buy when the high of the upclose bar is broken on upside.....
Perfect.....Rajadhiraj...( King of Kings....)

Smart_trade
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  #23  
Old 28th June 2009, 07:26 PM
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Default Re: How to trade with an oscillator

Thanks ST for starting this highly focused thread on one of the most popular indicator.

I like the way, u have filtered the possible failure zone of oscillator (by 5 bars in OB zone). That is the time most of the oscillator signal end up proven wrong by strong underlying trend.

Will be watching this thread to learn from your experience.

Happy Trading.
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  #24  
Old 28th June 2009, 07:55 PM
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Default Re: How to trade with an oscillator

Quote:
Originally Posted by AW10 View Post
Thanks ST for starting this highly focused thread on one of the most popular indicator.

I like the way, u have filtered the possible failure zone of oscillator (by 5 bars in OB zone). That is the time most of the oscillator signal end up proven wrong by strong underlying trend.

Will be watching this thread to learn from your experience.

Happy Trading.
Thanks and Welcome to the thread,AW10.....look forward to your valuable inputs too....

Best Wishes,

Smart_trade
  #25  
Old 28th June 2009, 08:42 PM
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Default Re: How to trade with an oscillator



The oscillator trade entry qualifiers can be used to perfect the trade entry on any timeframe...we have seen 5 min and 60 min TF examples...now let us see daily TF example...

The chart posted is a Bank Nifty chart for Dec 07-March 08 period...

The stochastic oscillator went into overbought region in a strong bull market on Dec 04,2007 and if we apply the entry qualifiers.we are saved from a premature short trade and susequent stoploss....The oscillator stayed in OB region for 8 days indicating market very strong...the bull pressure needs to dissipate.......

The stochastic again went to OB zone on 31-12-07 but again qualifiers saved us....the indicator stayed in the OB region for 7 bars....hmmm not yet good time to sell....bull pressure needs further dissipation.....

Finally the indicator goes in OB region again on 15-1-08 stays there only for a day ,next day gives a downclose and flips to the neutral zone....ah....now we look for a sell opportunity......The low of the downclose bar was cracked on 18-1-08 and that gave us a great sell and the market never looked back and crashed by more than 3000 points and the rest is history....

Is this qualifier never fail...holy grail ? Nothing in trading is failproof...but this qualifier will save you from 80 % of oscillator whipsaws....is n't that a great news ?

Best Wishes,

Smart_trade

Last edited by Smart_trade; 28th June 2009 at 08:47 PM.
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  #26  
Old 28th June 2009, 10:44 PM
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Default Re: How to trade with an oscillator

Quote:
Originally Posted by Smart_trade View Post


The oscillator trade entry qualifiers can be used to perfect the trade entry on any timeframe...we have seen 5 min and 60 min TF examples...now let us see daily TF example...

The chart posted is a Bank Nifty chart for Dec 07-March 08 period...

The stochastic oscillator went into overbought region in a strong bull market on Dec 04,2007 and if we apply the entry qualifiers.we are saved from a premature short trade and susequent stoploss....The oscillator stayed in OB region for 8 days indicating market very strong...the bull pressure needs to dissipate.......

The stochastic again went to OB zone on 31-12-07 but again qualifiers saved us....the indicator stayed in the OB region for 7 bars....hmmm not yet good time to sell....bull pressure needs further dissipation.....

Finally the indicator goes in OB region again on 15-1-08 stays there only for a day ,next day gives a downclose and flips to the neutral zone....ah....now we look for a sell opportunity......The low of the downclose bar was cracked on 18-1-08 and that gave us a great sell and the market never looked back and crashed by more than 3000 points and the rest is history....

Is this qualifier never fail...holy grail ? Nothing in trading is failproof...but this qualifier will save you from 80 % of oscillator whipsaws....is n't that a great news ?

Best Wishes,

Smart_trade
Hi ST

It is a great example that you have beautifully explained on oscillators.
I am a beginer in trader been in for 2 months and actively trading Options, it has given me returns and have got losses as well, have been following SMA crossovers and bolliger bands ref for my decission making and now that Stochastic charts is good indicator which is was unware of,

Could you pls guide me on intraday trade of options the settings that i need to follow for tracking nifty for stochastic, and also following stochastic charts for options is it a good idea ???

cheers
Aqua.
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  #27  
Old 28th June 2009, 11:05 PM
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Default Re: How to trade with an oscillator

Quote:
Originally Posted by Aqua9 View Post
Hi ST

It is a great example that you have beautifully explained on oscillators.
I am a beginer in trader been in for 2 months and actively trading Options, it has given me returns and have got losses as well, have been following SMA crossovers and bolliger bands ref for my decission making and now that Stochastic charts is good indicator which is was unware of,

Could you pls guide me on intraday trade of options the settings that i need to follow for tracking nifty for stochastic, and also following stochastic charts for options is it a good idea ???

cheers
Aqua.
Hi Aqua ,

I am glad that you liked the oscillator example in my post....thanks...
for day trading you have to go for 5 min or 10 min timeframe and use 8,3,4 stochastic settings....it will identify buy and sell zones pretty well....you have to see stochastic chart for the underlying ie nifty and if nifty is taking off from oversold region buy calls/sell puts.....and if nifty is coming down from overbought area,buy puts/sell ATM calls....

Options work great intraday.....I trade them too intraday....

Best wishes,

Smart_trade
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  #28  
Old 28th June 2009, 11:08 PM
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Default Re: How to trade with an oscillator

ST da,

Can you put across some thoughts on the indicator systems ver. our pivot based flow trades, pros and cons.

Though each seems to have its good and bad periods, somehow the pivot based system seems more rational and versatile.

Another thing is that will indicator based trading systems work only in certain market phases or will they work across market phases. Also how do we arrive at the parameters for these indicators?

Thanks.
  #29  
Old 28th June 2009, 11:16 PM
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Default Re: How to trade with an oscillator

Quote:
Originally Posted by Smart_trade View Post
Hi Aqua ,

I am glad that you liked the oscillator example in my post....thanks...
for day trading you have to go for 5 min or 10 min timeframe and use 8,3,4 stochastic settings....it will identify buy and sell zones pretty well....you have to see stochastic chart for the underlying ie nifty and if nifty is taking off from oversold region buy calls/sell puts.....and if nifty is coming down from overbought area,buy puts/sell ATM calls....

Options work great intraday.....I trade them too intraday....

Best wishes,

Smart_trade
Hi ST

Thatz great to hear from you on options, but to be very frank on a 5 min or 10 min chart mostly the flucations of candles is so high ( bullish to bearish or Viceversa) that most of times i end squaring off my postions early, which i feel is a great loss on my profits but i am mostly concerned abt principle protection.

Some views of yours will be a confidence builder for me,

cheers
Aqua.
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  #30  
Old 28th June 2009, 11:40 PM
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Default Re: How to trade with an oscillator

Quote:
Originally Posted by Flock View Post
ST da,

Can you put across some thoughts on the indicator systems ver. our pivot based flow trades, pros and cons.

Though each seems to have its good and bad periods, somehow the pivot based system seems more rational and versatile.

Another thing is that will indicator based trading systems work only in certain market phases or will they work across market phases. Also how do we arrive at the parameters for these indicators?

Thanks.
Flock,

Pivot based trading methods are great ...they are trend following methods and work very well in trending markets...where as oscillators are trading or sideways market indicators....they work well in sideways market...we have both types of markets...so different tools for different jobs...

We must have as many indicators pointing toward a particular direction as possible even if we are trading pivot based methods to stack the odds in our favour....a PL break and oscillator giving a valid sell from overbought zone is a very potent sell signal...

I use oscillators as confirming indicators....not as trading systems...but I have traded quite successfully on oscillators alone and I know that if handled well they give you great edge in trading.

We are friendly with pivots,flow,oscillators....no quarrel with any method.....Anything that gives us an edge is our method....

Best Wishes,

Smart_trade

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