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Strategies & Market Trends : S&P Futures - Indicators and Strategies

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To: Lee Lichterman III who wrote (2)	9/19/1999 3:17:00 PM
From: keith massey	Read Replies (1) of 28

Lee... You are probably right that nobody wants to share their secret/holy grail but I don't mind sharing ideas and giving away pieces in order to become a better trader myself. Since you mentioned Stochastics maybe you can give away your settings and feeling on the indicator without giving away the bag. I have tested and double tested Stoch. (both by itself and in combo with directional indicators VHF,ADX,Slope,etc. and other indicators) and have never found it to be a great indicator. I find the whipsaws out number the true signals.... You already know this but since this is an education thread............. What Stochastics does is look at the low and high range for X number of periods. It than tells you where the price is in relation to the high and low for the X number of periods you wanted. The %D is just a smoothed out %K line. You can smooth out the %K line using several methods (i.e., Exponential, Simple, Time Series, Triangular, Variable, or Weighted). In other words the %D really doesn't give you any extra information that is not already contained in the %K line. The %K is just smoothed to make the %D and remove some noise in the signal to make it easier to look at. Case Study If the price is trending the stoch. will often give an oversold/overbought indication right away. If it pulls back to form a flag before the trend continues the Stoch. will often give a false sell/buy signal. If the trend is in its early stages the trending indicators will not show trend yet. So how do you filter out good signals from false signals?? On the flip side....I have used Stoch. once or twice with Linda Bradford Raschke's and Conners HOOK method and found it works a little better than the standard buy/sell signal. Best Regards KEITH

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