stochastic intraday trading

[RamP]

Hi Prateek!
As you are putting lot of efforts in identifying the stocks please give us the information and I will also do the same. thanks again

 

[AW10]

Hope you guys have checked this thread by Smart_trade.

http://www.traderji.com/day-trading/30182-how-trade-oscillator.html

Your views on stochastics will change after reading his posts on this thread.
If you trade it the way you have been discussing here (i.e. divergence), then in trending days, it might hit u badly. So you need to put something in your system to assess current market conditions first.. and then use stoch, if market is not in trending mode.

Stochs work fairly well in rangebound mkt or moderately trending mkt, but in strong trends they are utter failure.

No indicator is 100% correct, so is stoch.. But thats where your rules about stoploss will help you. So think about stops as well.

Happy Trading

 

[veluri1967]

hello valencia
you have misunderstood the signal.
i said that the share MUST NOT made a new low
whereas the stochastic has made a new low preferably below level of 20

if the share has made a new low , we should not buy

Prateek,

Inspite of stoch making a new low compared to price, it does not qualify for a buy. When the stoch makes a new low, there are two possibilities and none of which we cannot eliminate. One is that stoch may continue to be in the same level ie below 20 making the trend of the price stronger. Second is that it may bounce back. When two different possibilities are there, we cannot simply press BUY signal because stoch has made a new low.

Am I right or wrong?

 

[findvikas]

Yahoo Server use %K = 15, %D = 5 for S-Stoch by default. One can get FREE Intraday Charts 2min,5min,30min,1day,1week chart at http://Google.com/finance - You need to login to your Google account for interactive chart... you can also add indicators like Stoch, MAs etc..

Just relying on Stoch is not a safe bet, as Stochastic is a pure reflection of price movement over a period of time. You need to use MA along with SS or other parameters to confirm the entry-exit.

Stoch does not necessarily perform same for all stocks and it depend upon stock's characteristic how well a SS will perform, but yes majority of them work fine and can confirm entry-exit... its not really a tool to tell you entry-exits... but a tool to confirm your entry & exits


Just my thoughts...

 

[yogesh-tiwari]

My 2 cents,

I read "Come into my trading room" by Alexander Elder.

He talks about using divergence from oscillators for making entry-exit. Divergence in oscillator tends to give really good signal, and often you can catch a trend in its very early stage.

Stop losses are a must, though.

Hounds of Baskerville, as Elder talks about it, he says whenever divergence fails, price tends continue with earlier trend.