Best Indicator to use with Stocastics.

[Joey25]

Hello,

Could you elaborate a little more, what signals do you use, and how to use leverage as risk management?

Thanks

For foreign exchange, I use channel breakouts and the interest rate differential as signals.

I calculate the level of risk at the 99.5% level of significance using a variant of GARCH, and then a certain percentage of my account I would be willing to lose in that event.

 

[Rooster34]

Hi there,


Looking to use stochastic crossovers for entry points, and then have a strict stop loss in place.


What other indicator should be used to help confirm the entry point with the crossover?


The plan is to intraday swing trade.


Thanks

Bollinger bands, standard settings, 20, 2. Wait for price to pierce the upper band with the stoch in the oversold area, sell on the cross. The opposite for longs.
Alternatively you could draw in significant areas of support and resistance wait for them to get hit, then wait to see if the stoch is overbought/sold and wait to see if it bounces. That way you have 2 trade options. Fade the area on a stoch cross, play the breakout on a strong close above/below the S/R.

 

[Rooster34]

Bollinger bands, standard settings, 20, 2. Wait for price to pierce the upper band with the stoch in the oversold area, sell on the cross. The opposite for longs.
Alternatively you could draw in significant areas of support and resistance wait for them to get hit, then wait to see if the stoch is overbought/sold and wait to see if it bounces. That way you have 2 trade options. Fade the area on a stoch cross, play the breakout on a strong close above/below the S/R.

Geez, edit. Overbought for shorts, oversold for longs. Of course.

 

[Rooster34]

Honestly, this is the time at which I bail in terms of advice because you have to experiment to find what works for you. Warning, no system Is infallible, whatever you use two wins one loss is an exceptional performance, aim for that..over the next twenty four months..

Right now my biggest obstacle to trading is me, I have a really hard time letting winners run. Having said that, 66% win rate over a big enough sample size would be awesome.

 

[timsk]

Bollinger bands, standard settings, 20, 2. Wait for price to pierce the upper band with the stoch in the oversold area, sell on the cross. The opposite for longs.
Alternatively you could draw in significant areas of support and resistance wait for them to get hit, then wait to see if the stoch is overbought/sold and wait to see if it bounces. That way you have 2 trade options. Fade the area on a stoch cross, play the breakout on a strong close above/below the S/R.

The basic premise is a simple one - which is good - but there is a risk warning attached. Namely, this will work reasonably well when the market is consolidating in a range but, sooner or later, it's goin' to break out of the range. At that point - you'll come unstuck, badly! Additionally, if you use it to fade the market when it's trending - you'll also end up bashing your head against the wall as price 'rides the bands' and any oscillator stays permanently over bought/sold.

Knowing when to ignore indicators, i.e., knowing when the information they impart is at best unreliable and at worst positively misleading - is the secret to using them successfully. Trading any or all of the signals they offer without evaluating the context in which they appear (e.g. a breakout or trend in this case) will lead to losing trades and greatly reduce the success ratio of the signals generated by the indicators. Needless to say, this principle applies to all indicators - not just the ones mentioned here.
Tim.

 

[Rooster34]

The basic premise is a simple one - which is good - but there is a risk warning attached. Namely, this will work reasonably well when the market is consolidating in a range but, sooner or later, it's goin' to break out of the range. At that point - you'll come unstuck, badly! Additionally, if you use it to fade the market when it's trending - you'll also end up bashing your head against the wall as price 'rides the bands' and any oscillator stays permanently over bought/sold.

Knowing when to ignore indicators, i.e., knowing when the information they impart is at best unreliable and at worst positively misleading - is the secret to using them successfully. Trading any or all of the signals they offer without evaluating the context in which they appear (e.g. a breakout or trend in this case) will lead to losing trades and greatly reduce the success ratio of the signals generated by the indicators. Needless to say, this principle applies to all indicators - not just the ones mentioned here.
Tim.

I agree wholeheartedly, I'm still trying to understand and get comfortable with my trading. I try and look for a confluence of things, i.e. BB bands, candlestick pattern, support/resistance, Fibs, trendline, ect. I've experienced price crawling along the bands. It sucks. Lol

 

[Rooster34]

Also, I'm finding that in order to be profitable I need at least 2R wins. Period. Higher would be better obviously. So I've been putting on a trade, getting my SL to BE after 1 to 1 and sitting on my hands. It's tough to wait a week or two for a setup and have it end up break even. But I'm getting comfortable with that too with time.