How to trade with an oscillator

EagleOne

EagleOne

Well-Known Member
#521
#521
Smart_trade said:
This method I have traded for a long time...actually this thread was started because I saw someone trading oscillators in wrong way.....no trading school etc...just shared some of my experiences in this thread so that the beginners in trading will shorten their learning curve...

Remember that oscillators are tools for sideways markets and they work best in non trending markets....for trending markets you may not get good trades and you have to use trend following methods once market starts trending an whatever timeframe you trade.

Best wishes for your success with this method and also trading overall...:)

Smart_trade
Click to expand...
ST, you are being modest. And like Connan Doyle's legendary logician, I don't rank modesty among virtues. But in your case one has to make room for an exception. :)
You have done in this thread's few pages so far what many may not accomplish in 100s. Yes, I agree with GSAM's observation. This thread does have a sanctity of a proper classroom. Although, as you know, I am a totally canteen rat but I always feel honoured when I get to share some of my meagre trading knowledge in this classroom of yours. I hope it will continue with more of wise gems from your experience.

BTW, the way I see the market, your oscillators' method will have more time among trading tools in coming times because markets are becoming so volatile by the day that sideways movements are going to be norm and trends, exceptions. Bad for postional traders and investors, but good for daytraders.
Just my thoughts.
 
EagleOne

EagleOne

Well-Known Member
#522
#522
Smart_trade said:
.....
Remember that oscillators are tools for sideways markets and they work best in non trending markets....for trending markets you may not get good trades and you have to use trend following methods once market starts trending an whatever timeframe you trade.

Smart_trade
Click to expand...

Sorry to bother you again, ST. But being a die-hard Physics student I am a sucker for elegance and simplicity in equations, so I can't resist going through your earlier posts again and again! :D

I just have a tiny doubt as to your above statement (underlined). Contrary to its implied limiting effect, I think it is scalable to any market situation. All you have to do is to get a higher TF and matching nimble Stoch settings, and bingo! :)

To support my supposition, I have this link of your earlier post.
http://www.traderji.com/day-trading/30182-how-trade-oscillator-3.html#post327939


PS. Please if you get some free time, let us know the ideal settings of Stochastics for higher TFs. Thanks

 
Last edited:
Smart_trade

Smart_trade

Moderator
#523
#523
EagleOne said:

Sorry to bother you again, ST. But being a die-hard Physics student I am a sucker for elegance and simplicity in equations, so I can't resist going through your earlier posts again and again! :D

I just have a tiny doubt as to your above statement (underlined). Contrary to its implied limiting effect, I think it is scalable to any market situation. All you have to do is to get a higher TF and matching nimble Stoch settings, and bingo! :)

To support my supposition, I have this link of your earlier post.
http://www.traderji.com/day-trading/30182-how-trade-oscillator-3.html#post327939


PS. Please if you get some free time, let us know the ideal settings of Stochastics for higher TFs. Thanks
Click to expand...
Market has 4 trends going on simultaneously and there is an interplay of these trends which if understood properly help us understand the price moves. If the market is not trending on one timeframe ,it will be trending on the higher /lower timeframe and the key is to find out which timeframe it is trending and trade that very timeframe.

While on the subject of trends, we observe that in a trended market ( let us take example of an uptrend )we see that oscillator does not come to oversold region of 20 but in a correction it comes in the region of 30-35 and the move takes off again. In such trending markets we can change the action band to 85-35 instead of 80-20 and get some trades when market undergoes a small correction in an uptrend....but that requires good understanding of trends and a mind which adapts to various situations in realtime.

I believe in keeping my indicator parameters same and not change them too often otherwise we fall into a trap of indicator overoptimisation. Would like to change my OB/OS band depending on the timeframe and the strength of the trend.Overoptimisation makes the indicator work great during sampling period and totally fail in out of sampling tests.Same setting should work satisfactorily on all timeframes....that is a sign of a stable system.

Hope the above answers your questions....:)

Smart_trade
 
EagleOne

EagleOne

Well-Known Member
#524
#524
Yes, indeed, ST. Your post answered my query beautifully, and also gave me other good ideas to ponder over. Incidently, since my last post I had been backtesting my suppostition in various TFs over the portions of Nifty's two years' data showing clear up/down trends, and found that the oscilator would lag behind and didn't catch the moves on time on many occasions - particularly during blasting uptrends in higher TFs. I changed the Stoch combination to all sorts, but still the reliability diminished compared to sideways moves. But I think it is OK to test one's hunches howsoever wild they may seem! :D

Thanks for your prompt response. Didn't want to bother you on Sunday, sorry.
 
columbus

columbus

Well-Known Member
#529
#529
You can find out the merits and de-merits for yourself.
After seeing EOD graph ,people come under the impression that trading is
the easiest job on the earth to do, but it is one of the toughest jobs.

 
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