Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Stochastics -- Ignore unavailable to you. Want to Upgrade?

To: posthumousone who wrote (25)	1/23/1998 9:03:00 AM
From: Wayners	Respond to of 927

Yes absolutely, Stochastics are read differently depending on whether it is in a neutral trading range (i.e. your favorite moving average will be neutral/flat) or trending (i.e. your favorite moving average sloped either up or down) Just simply following a simple moving average is the easiest way. When you have a neutral trend and it just starts to slope up for example, its because the price has just broken out of trading range and its just starting to trend. Sometimes it will continue to trend from there. You can pick up trends on stochastics also, but its easier to see with bollinger bands drawn on it. In an uptrend, stochastics will go over 80 and stay over 80. No sharp peak reversals in stochastics. In a neutral trading range, stochastics will peak over 80 and promptly reverse. In your example, you need to pick what your trading timeframe is and stick to it. Do you want to get in and get out in 30 days, 50 days, 6 months or two weeks? Everybody is different, mostly dependent on their patience, how much volatility they can stomach, and how much money they want to make and how hard they are willing to work for it by doing a lot more trading. The trends will be different depending on your individual timeframe. The two week trader will quickly get out of a position that is not going the right way. The trade might have eventually worked out, but the two week trader doesn't take any chances. The two week moving average is very responsive to price moves, while a 30 day trader's position will be much slower to get out because the 30 day moving average is much less responsive to daily price moves. The 30 day trader will put up with a lot more price movement/volatility and noise than the two week trader. Make sure your moving average period is equal to your stochastic or MACD time period when reading the same chart. You must be consistent here.