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

To: MJR who wrote (281)	2/27/1998 9:12:00 AM
From: CJ Owen Critchley	Respond to of 927

I set stochastics period for 5 for most stocks. However I also look at a longer period (in my case often 39) to see the 'personality' of the stock to determine if it has quirks or recurring behaviour. The Moving Average helps determine present momentum or lack thereof. If you see Wayne's posts on this thread, he goes into some really useful detail about many of these indicators. CJ.

To: MJR who wrote (281)	2/27/1998 10:58:00 AM
From: Wayners	Respond to of 927

Sounds like my same timeframe except I'm flipping stocks instead of options. Use between a 3 and 12 day moving average and use between a 3 and 5 day stochastic. Use what I use--Stochastic %K=5, %D=3 and a 3 day moving average and 12 day moving average. The stochastics will be pretty smooth without many false direction changes and the change in the direction of the 3 day moving average will alert you early to changes in the 12 day moving average. With buying puts and calls the most importants things are to buy them at or slightly in the money such that the delta is high. Greater than 75 is preferable and making sure the underlying's volatility is is either really low but ready to increase or the volatility has just started to pick up on a breakout. Always follow the trend. Because of the time value decay, if you chart the prices of options over time you can see why the option writers have the advantage. The options prices are generally always on a steep downtrend. Perfect short/writing situation. Good luck.