Best use of Stochastics please | Forex Factory

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Best use of Stochastics please

  • #1
  • First Post: Mar 5, 2007 9:47pm Mar 5, 2007 9:47pm
Hi all, I have been looking round here for a while and would like to ask if anyone could advise the best timeframe and the best settings for the Stochastic indicator.

I like to day trade so any info that might help me...and others would be appreciated.
  • #2
  • Mar 6, 2007 11:39am Mar 6, 2007 11:39am
Quoting dragon77
Hi all, I have been looking round here for a while and would like to ask if anyone could advise the best timeframe and the best settings for the Stochastic indicator.

I like to day trade so any info that might help me...and others would be appreciated.
try 22,5,11
  • #3
  • Apr 11, 2007 9:13am Apr 11, 2007 9:13am
Quoting dragon77
Hi all, I have been looking round here for a while and would like to ask if anyone could advise the best timeframe and the best settings for the Stochastic indicator.

I like to day trade so any info that might help me...and others would be appreciated.
Dragon,

If you have a look at the "Spudfyre" thread MTF Stochastics he had started a discussion on how they work for him and how it can be run any time of the day is there.

Hope it helps

James
  • #4
  • Jul 27, 2008 4:49pm Jul 27, 2008 4:49pm
My experience says :

5,3,3 is the best settings for stochastic specially
In 4h frame and daily chart.
  • #5
  • Jul 27, 2008 10:05pm Jul 27, 2008 10:05pm
It basically depends on your system, time frame etc, for me I use stochastic momentum indicator for when I scalp the market, it gives me levels where I need to look for exits.

My suggestion is play around with it to see if it suits your system and personality.

cheers
Go Getter When Trading Its All About "WHO YOU ARE BEING"
  • #6
  • Jul 27, 2008 11:54pm Jul 27, 2008 11:54pm
I think the best use for Stochastics is as Stoch. Compost. Just dump it in a bin like this one and in about 2 weeks you will have compost ready to use for your garden. Now tell me, what does stochastics show that is invisible to the naked eye?
Attached Image
  • #7
  • Jul 28, 2008 12:00am Jul 28, 2008 12:00am
Quoting bobblong
I think the best use for Stochastics is as Stoch. Compost. Just dump it in a bin like this one and in about 2 weeks you will have compost ready to use for your garden. Now tell me, what does stochastics show that is invisible to the naked eye?
Dont forget to throw all the other useless indicators in there with it.

Stick with PA! Cant go wrong!


Mike
  • #8
  • Jul 28, 2008 12:18am Jul 28, 2008 12:18am
I love how people come in here and bash a trading method just because it isn't the way they trade.

Pip Ventures: By your statement "Stick with PA. You Can't go wrong" you are implying that PA is 100% accurate and you will never have a losing trade. Is that true??
  • #9
  • Edited 12:53am Jul 28, 2008 12:42am | Edited 12:53am
Any study of Any situation can only examine what has already passed.
Does that mean we should shut down all the Universities?
Of Course not.

One of the biggest reasons "Indicators Do Not Work" is that they are applied wrong OR expected to be infallible.

Before you try manipulating User Inputs in Any Indicator, it is imperative that you understand the Mechanics of that indicator.

Hanz suggested 22:5:11 {assumebly} for your Daily Request.
Dracula suggested 5:3:3 for a 4Hr chart

Both make sense if you Understand What Stohs Measure. {although I would probably adjust them both slightly}


Slow Stochastic:
Calculation is...
(Current Price - the Lowest Low of the Previous (x) Periods) {22 in Hanz suggestion}
Divided by the (Highest High - the Lowest Low) of the Same Period.

The quotient of this equation will Always be Less Than {or = to} 1.
ie 0.20 or 0.80 so we then Multiply the result by 100 to acheive an Oscillator that ranges between 0 & 100.

The Main Stoh Line is
An MA of the above calculation {The Second Input}

The Trigger Stoh Line is
An MA of the Main Stoh Line {The Third Input}

So; the Question is, What Periods are Important to you.
If you are looking @
Dailies you may be interested in:
6:4:3 {week:month:quarter}
24:3:4 {month:quarter:year}

So, can you figure out what Dracula is calculating?
(I can just see everyone running to their code screens to rewrite Stohs to be a True {week:month:quarter} measure as opposed to an Average of such)
  • #10
  • Jul 28, 2008 12:53am Jul 28, 2008 12:53am
Quoting magnumfreak
I love how people come in here and bash a trading method just because it isn't the way they trade.

Pip Ventures: By your statement "Stick with PA. You Can't go wrong" you are implying that PA is 100% accurate and you will never have a losing trade. Is that true??
Im not bashing Stoch.

Its just that all indicators are lagging.

This means that AFTER something happens with PA, THEN the indicator tells you about it.

If you were watching PA then you would already know what was happening right when it was happening.

And yes PA is 100% accurate. It is the truth of the moment and does not lie and is not lagging.

I have no problem with people using indicators, it just seems that you are missing quite a bit of the move by the time your indicators tell you all is good. No matter what the settings.

There are no settings to tell you WHAT WILL HAPPEN.

Only WHAT HAS ALREADY HAPPENED.

PA followers have already gotten in the move and are about to take their profits from all those who are just getting in with their STOCH.

Its just my opinion.

Everyone is entitled to one.

No hard feelings.


Mike Lewthwaite
  • #11
  • Jul 28, 2008 12:58am Jul 28, 2008 12:58am
Quoting Pip Ventures
Im not bashing Stoch.

Its just that all indicators are lagging.

This means that AFTER something happens with PA, THEN the indicator tells you about it.

If you were watching PA then you would already know what was happening right when it was happening.

And yes PA is 100% accurate. It is the truth of the moment and does not lie and is not lagging.

I have no problem with people using indicators, it just seems that you are missing quite a bit of the move by the time your indicators tell you all is good. No matter what the settings.

There are no settings to tell you WHAT WILL HAPPEN.

Only WHAT HAS ALREADY HAPPENED.

PA followers have already gotten in the move and are about to take their profits from all those who are just getting in with their STOCH.

Its just my opinion.

Everyone is entitled to one.

No hard feelings.


Mike Lewthwaite
How, exactly, does PA tell You what is about to happen. I'd love to here it.
Oh... I know... cause it worked in the past...
followers
  • #12
  • Jul 28, 2008 12:59am Jul 28, 2008 12:59am
Quoting Bemac

One of the biggest reasons "Indicators Do Not Work" is that they are applied wrong OR expected to be infallible.
This is true.

You CAN use an indicator to try and predict what will happen.

BUT...

Most do not use them this way. They say...

If the 5 crosses the 10 and the adx is crossing and the stoch is coming down and the macd is crossing the 0 and my rsi is below 50 then...

THEN they will act.

By that time it is to late.

Now if you want to say something more like this...

The 5 looks like it is ABOUT to cross the 10 and the ADX is ABOUT TO CROSS and the MACD is ABOUT to...

Then this is something different.

You can say that your indicators, if they keep going the direction they are currently going, will line up so I will get in now because I am also at a S&R or 00 or whatever.

But I dont know anyone using indicators like this do you?

Most use a concrete set of rules like above and this gets you in to late.

Again, this is just my opinion.


Mike
  • #13
  • Jul 28, 2008 1:00am Jul 28, 2008 1:00am
Quoting Bemac
How, exactly, does PA tell You what is about to happen. I'd love to here it.
Oh... I know... cause it worked in the past...
LOL that was funny.

But yes it is the truth.

P.S If you want more info look at my chart posting in my thread.

You will see how I enter trades. I enter based on S&R, Trends, Channels, etc. If a price is at the top of a downward trend channel then I will take a short. But if I were to wait for the 5 to cross the 10 the woodies cci to change and cross 0 and blah blah blah, then I am already a quarter to half way down the trend channel and most profits are gone. So PA tells me what is going to happen because I do know that in the PAST it has always acted a certain way with S&R and most probably will act the same again. It will break through, retest, and then shoot. Happens over and over again. but if while it is retesting I am waiting for some lagging indicator to tell me to get in then it is too late.
  • #14
  • Jul 28, 2008 4:49am Jul 28, 2008 4:49am
Quoting Pip Ventures
Im not bashing Stoch.

Its just that all indicators are lagging.

This means that AFTER something happens with PA, THEN the indicator tells you about it.

If you were watching PA then you would already know what was happening right when it was happening.

And yes PA is 100% accurate. It is the truth of the moment and does not lie and is not lagging.

I have no problem with people using indicators, it just seems that you are missing quite a bit of the move by the time your indicators tell you all is good. No matter what the settings.

There are no settings to tell you WHAT WILL HAPPEN.

Only WHAT HAS ALREADY HAPPENED.

PA followers have already gotten in the move and are about to take their profits from all those who are just getting in with their STOCH.

Its just my opinion.

Everyone is entitled to one.

No hard feelings.


Mike Lewthwaite
The theory that all indicators are lagging is not true. You can use a 1 MA Median crossing any other MA and you dont have a lagging indicator. That will give you a cross according to what price is doing now. When it uncrosses you can get out. Works on any time frame.

The Sto Oscillator using LWMA actually gets ahead of what price is doing and can be a predictor. I use two stos, a MA with a MACD on one indicator and it is fairly accurate most of the time. I attach a pic with a template on a 4H chart and you can decide for yourself. If all 4 meet above the 85 or below the 15 and are bouncing off one of the red or green lines you have a good trade setup. The lines are set at 75, 150 & 300 pips above and below the 89 MA. You can visually back test the system and trade on a demo with it. The RED and White sto lines as they converge on the Gold MACD line give a prediction of a retracement or change of price direction during the week. Sometimes this turn around can take a day or two but it is interesting to watch. Lets you know a trade setup is coming. You can then go to a lower chart and enter. Sto gets to over bought too quickly, the MACD gets there late. Put the two together and you have a prediction. The Aqua MA line on the chart gives you an entrance point when price crosses it and heads for the other direction. Simple, predictive (not lagging) and works the majority of the time. Here is the AUD/USD trade I took today and it is now in profit.
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Attached File(s)
File Type: tpl 4h 3sto & macd & 89 ma.tpl   6 KB | 3,845 downloads
  • #15
  • Jul 28, 2008 4:52am Jul 28, 2008 4:52am
15,5,5 for me. But currently not really using it...
  • #16
  • Dec 16, 2009 4:20pm Dec 16, 2009 4:20pm
Dragon 77,

You might enjoy reading the forum "Stochastic Secrets" by RedTrader.

BTW I use that indicator all the time with a high percent success rate.

Enjoy...
  • #17
  • Dec 16, 2009 4:49pm Dec 16, 2009 4:49pm
IMHO, just sometimes, when diverging, it's one more piece of the puzzle.

Many times in early days just did like: "sell" when Sto was above 95 (c'mon that's D1... OF COURSE it's going down!....how smarrt I am!... then Sto keep above 95 for 3 days... a tiny bounce to 85 (Yes!! i knew I was right!) then beck to over 95... In the meantime, SL taken, another sell (Yes, I know... revenge!... shame on me....) antoher SL taken, an price reaching the stars....

Just my experience...

For me it's just a tool. nothing more..... But the word "predictor" just scares me to death...

Cheers!
Many share my views with me. But I don't share them with them...
  • #18
  • Dec 18, 2009 3:15pm Dec 18, 2009 3:15pm
I have to agree with Bemac here. Most people who have had bad experiences with indicators were probably using them the way they were designed. For example, Welles Wilder designed the RSI to determine overbought and oversold and to find divergences. It has been shown that RSI is not a indicator that can determine overbought or oversold as proved by Andrew Cardwell. Walter Baeyens has also shown this as has Constance Brown in their books. Does that mean the RSI does not work?Not at all. It just shows that most people who use them are using them under the rules that Wilder set for them.

Cardwell discovered something while working with RSI that 99% of traders don't know about. Traders who do know about it use it to a very useful advantage.

The complaint about lagging indicators is not that powerful an argument when in reality I think you can describe everything on your chart as no better than the actual present.

There are very powerful PA setups that can be confirmed with a true reading of a momentum oscillator.
  • #19
  • Dec 18, 2009 3:37pm Dec 18, 2009 3:37pm
Indicators, technically doesn't have to lag ... as Bemac stated. I know traders that uses a MACD setting 5,8,5 and 8,9,6 which is fast enough to spot reversals. Another trader friend I have trades only with Stoch setting 14,2,2 on 10 min chart. By not following the Stoch MA cross and instead follow the rules of Over Bought/Sold and by following the basic rules of the short term trend he is also able to "predict" reversal point in the market enabling him to jump in at the right moment. He's a farily new trader and doing very well for himself. Teaching me and few other veterans his method of trading. I'v personally cleaned up a few thousands usuing his method. Simple and precise. Now, I'm not a fan of indicators nor short timeframes ... but we are able to spot some real profitable moves using Stoch 14,2,2. Just remember ... don't follow the MA cross action only follow the market movement as a whole. With this method, trends up then down with a few small retracements in the middle. Vise versa for when the trend is down then up. Kepp it Simple. Go with the Trend
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  • #20
  • Jan 1, 2010 7:28pm Jan 1, 2010 7:28pm
Come over and join us to learn more about Stochastics at: Commercial Forum (beta) > Under Evaluation "Craig Harris Stochastics Method"
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