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Stochastic secrets

  • #21
  • Sep 2, 2008 3:44pm Sep 2, 2008 3:44pm
Yes that's the context of isolation I had in mind.

It's an indicator, not a strategy.

To me used in isolation would mean that you based an entire strategy just using one indicator and nothing else.
  • #22
  • Sep 3, 2008 1:55am Sep 3, 2008 1:55am
charlinks, I agree with you. I use to say that an indicator doesn't have a brain, but, we - traders - do. And yes, a strategy based on one indicator cannot be named "strategy". As I say, I use Stoch, BB and Trix (for divergences).

But, let's not get to far from the purpose of the thread. The aim is to change experience.

By the way, I reminded my self about another signal that guides me when using stoch, so I updated the pdf from the first post.
  • #23
  • Sep 3, 2008 2:34am Sep 3, 2008 2:34am
You are correct... I apologize for steering this...

Back to the subject...

Here is a double stoch indicator I made based on Matt's (NewstraderFX) Double Stochastic method:

http://www.forexfactory.com/showthread.php?t=72002
  • #24
  • Sep 3, 2008 5:15am Sep 3, 2008 5:15am
  •  FxChi
  • | Joined Dec 2007 | Status: Cash Rules Everything Around Me | 749 Posts
Quoting charlinks
You are correct... I apologize for steering this...

Back to the subject...

Here is a double stoch indicator I made based on Matt's (NewstraderFX) Double Stochastic method:

http://www.forexfactory.com/showthread.php?t=72002
Thanks for posting that indicator. I'd like to try it with fibs, but it seems to delete the fibs on my chart.
"Wishful thinking dies hard." Igor T.
  • #25
  • Sep 3, 2008 6:34am Sep 3, 2008 6:34am
Quoting FxChi
Thanks for posting that indicator. I'd like to try it with fibs, but it seems to delete the fibs on my chart.
Sure. Fix is here.
Attached File(s)
File Type: ex4 BH_DoubleStoch_v2.ex4   5 KB | 1,964 downloads
  • #26
  • Sep 3, 2008 6:37am Sep 3, 2008 6:37am
charlinks, 10x for posting the indicator. It looks quite interesting.
  • #27
  • Sep 3, 2008 6:41am Sep 3, 2008 6:41am
  •  FxChi
  • | Joined Dec 2007 | Status: Cash Rules Everything Around Me | 749 Posts
Quoting charlinks
Sure. Fix is here.
Thanks a bunch!
"Wishful thinking dies hard." Igor T.
  • #28
  • Sep 3, 2008 11:04am Sep 3, 2008 11:04am
Today seems to have been a little busy one. Anyway I'm waiting for some new waves of feed backs regarding your techniques in trading or not trading stoch.

Meanwhile, Happy Trading!
  • #29
  • Sep 3, 2008 11:53am Sep 3, 2008 11:53am
Quoting JohnDimitri
Heres my secret with stochastics. Not much of a secret but...only look for over bought signals
From my experience, this is not a good idea. Stochastics overbought and oversold levels (80-20) seem to mean nothing. If a trend wants to continue it will and you will get the stochastic staying above the overbought/sold line till it eventually stops. I think you would be better off using RSI to identify overbought/sold levels

Quoting Charlinks;
But I would NEVER use any indicator in isolation.
Yes. I for one use stochastics with MACD. The only analogy I can make is: I use them like a microscope. MACD is the coarse focus and stochastic is the fine focus.
  • #30
  • Sep 3, 2008 12:34pm Sep 3, 2008 12:34pm
Quoting charvo
I believe that this is the TRUEST opinion in this post. Really.

do you even know what a stochastic does or how its calculated? sure, it could seem useless to someone who has no idea what it does. a car is useless to dog, but to a person who knows how to use it, its essential to daily life. i can see where you're coming from, but only because you have no idea what you are talking about.
  • #31
  • Sep 3, 2008 1:41pm Sep 3, 2008 1:41pm
^^Yeah that series of posts knocking the stochastic made me laugh. I have used them successfully, and I find that they lag minimally.
  • #32
  • Sep 3, 2008 2:34pm Sep 3, 2008 2:34pm
Quoting brane
From my experience, this is not a good idea. Stochastics overbought and oversold levels (80-20) seem to mean nothing. If a trend wants to continue it will and you will get the stochastic staying above the overbought/sold line till it eventually stops. I think you would be better off using RSI to identify overbought/sold levels
This is why Matt recommends to only take the signal in the direction of the trend - can't get any easier.
  • #33
  • Sep 3, 2008 4:11pm Sep 3, 2008 4:11pm
Quoting RedTrader
I have to agree that trading for a long time based only on trend lines, psy levels, fibo (+fan) levels, chart and candlestick patterns (of course not forgetting about the fundamental part) I reached the conclusion that all stays in the chart but a) in order to minimize the S/L risk/trade and b) to have a much more clear view on the market psychology (oh! look!, the x indicator - oscillator - has just signaled) it's recommended to use at least one "classic" oscillator (rsi, stoch, adx etc.).



You can find in many places things like "use this indicator with at list one of the same class to confirm". But I realized that even with 2 indicators from the same class you just waste time. Every trade implies a risk so... if the economics for that country stays like "that", if the chart says "this", and the indicator says "the same" so do it... if your 80% sure that the price would move in that direction then it's good and you just open the trade.

AN INDICATOR IS JUST PSYCHOLOGY, it offers:
1. an image regarding which are the believes of the mass involved in the trades and
2. (assuming that it's integrated in a strategy) an indication - that's why it's an indicator - regarding the moment when the trade should be opened.

So, based on experience, a trader could use one indicator of a certain type (if I understood correctly the context of "isolation" - at least that's how I proceed).

IMO you need to ask yourself a few questions:

1. Why should stochastics (or other technical indicators for that matter) work?

2. Why do you need a stochastic to help you get "a much more clear view of market psychology"?

3. Since trading is a zero sum game do you belive finding the correct stochastic settings/using stochastics gives you a real edge over other traders?

A lot of traders try to keep adding indicators to a chart, or try to interpret price action through elliotwaves, fibs, chart patterns, etc. In reality there is only a limited amount of information/insight that can be gained from a chart.

People have invented hundreds of new technical indicators each with their own myriad of different settings, and other ways of interpreting the information on a chart over the past few decades. They are all playing with limited information. Are they really any closer to determining why prices did what they did?
Private message me for a link to my order flow website.
  • #34
  • Sep 4, 2008 10:29am Sep 4, 2008 10:29am
Quoting grkfx
IMO you need to ask yourself a few questions:

1. Why should stochastics (or other technical indicators for that matter) work?
they dont work in the way that most people use them. a stochastic oscillator doesnt show when something is overbought or oversold. it is a momentum indicator that shows the speed at which the market is moving. it calculates the difference between the highs and lows to see if the currency is moving up or down and if the currency is moving slow or fast. an indicator isnt a machine that makes you money. its a filter. i agree with you in the fact that the way people use most indicators is the wrong way to use them, but indicators do work if you know what they do.


Quoting grkfx
2. Why do you need a stochastic to help you get "a much more clear view of market psychology"?
it doesnt. theres no way to get the psychology of the market through an indicator. think about it, the onoly people that look at a stochastic oscillator are retail traders. if these people moved the market, i would say that it could have some psychological effect. but they DONT move the market. the only people who can force any change in the market are banks, large financial institutions, and massively capitalized institutional traders. none of these people look at stochastics, so therefore stochastics have no pyschological effect.

Quoting grkfx
3. Since trading is a zero sum game do you belive finding the correct stochastic settings/using stochastics gives you a real edge over other traders?
again, depends on what you use them for. if you use them because theyre your holy grail trading system, then no. but if you use them to get a feel for the momentum or speed of the market, then yes.

Quoting grkfx
A lot of traders try to keep adding indicators to a chart, or try to interpret price action through elliotwaves, fibs, chart patterns, etc. In reality there is only a limited amount of information/insight that can be gained from a chart.
same thing goes for fundamentals. you used the term "limited" the opposite of limited is unlimited. since you cant get an unlimited amount of info from ANY source, then everything is limited. if anything worked better than anything else, we would all be using that thing and we would be stinking rich.

Quoting grkfx
People have invented hundreds of new technical indicators each with their own myriad of different settings, and other ways of interpreting the information on a chart over the past few decades. They are all playing with limited information. Are they really any closer to determining why prices did what they did?
ill ask you the same with fundamentals. there are hundreds of different ways to interpret a single statement from a bank or whatever. which is the right way? you can only gain a "limited" amount of info from this intepretation. it's the same concept. are you any closer to determining why the prices did what they did than i am? no, because as you said, you have limited information.

basically, it comes down to this. why the heck does it matter to you if these people use stochastics? does it threaten you? do you feel inadequate because you dont understand them? there is no point arguing in a thread about how people use stochastics that stochastics are worthless. just ignore it. if it bothers you that much that people use something that you dont, go take over the world and ban stochastics. you dont have to act like a thirteen year old forum troll trying to make everyone do the same thing you do.
  • #35
  • Sep 4, 2008 10:33am Sep 4, 2008 10:33am
Quoting grkfx
1. Why should stochastics (or other technical indicators for that matter) work?
Because they are based on a mathematical formulas (and every time 1+1 will result in 2), formulas which combined with the psychology (which it's much the same) again results in patterns ("the history repeats itself").

Quoting grkfx
2. Why do you need a stochastic to help you get "a much more clear view of market psychology"?
A view of the market can be obtained by combining fundamentals with the basics and those simple rules/concepts of a trend, psy level and so on. But, when you see an indicator pointing something, you will know that all the other traders who use it will see the same thing and, as a result, they - the majority - take the same action/adopt the same position. And I wouldn't say that I "need" it. It's just a confirmation - sometimes I open the trade based on my experience, before the stoch to give it's signal (but when it's close to doing it). After a while it gives that signal and, as I said, I'm more confident in the mass psychology.

Quoting grkfx
3. Since trading is a zero sum game do you belive finding the correct stochastic settings/using stochastics gives you a real edge over other traders?
No. I wouldn't say "correct", but accurate and it offers me a much more tight s/l + the thing I already written.

Quoting grkfx
A lot of traders try to keep adding indicators to a chart, or try to interpret price action through elliotwaves, fibs, chart patterns, etc. In reality there is only a limited amount of information/insight that can be gained from a chart.
If you accept the construction: That "limited amount of information" is so enough.

Quoting grkfx
People have invented hundreds of new technical indicators each with their own myriad of different settings, and other ways of interpreting the information on a chart over the past few decades. They are all playing with limited information. Are they really any closer to determining why prices did what they did?
I think that "they" know better the answer to this question.
  • #36
  • Sep 4, 2008 12:09pm Sep 4, 2008 12:09pm
Quoting blacksun1

basically, it comes down to this. why the heck does it matter to you if these people use stochastics? does it threaten you? do you feel inadequate because you dont understand them? there is no point arguing in a thread about how people use stochastics that stochastics are worthless. just ignore it. if it bothers you that much that people use something that you dont, go take over the world and ban stochastics. you dont have to act like a thirteen year old forum troll trying to make everyone do the same thing you do.
I am not some thirteen year old troll trying to make everyone do what I do.
It actually benefits me if more traders use stochastics, but thats besides the point. There are aspiring traders out there who are looking for better information to work with and I was trying to stimulate that thought.


If you love stochastics and make it into a profitable system for you then good for you!


I'm done with this thread.
Private message me for a link to my order flow website.
  • #37
  • Sep 4, 2008 12:58pm Sep 4, 2008 12:58pm
Quoting grkfx
I am not some thirteen year old troll trying to make everyone do what I do.
It actually benefits me if more traders use stochastics, but thats besides the point. There are aspiring traders out there who are looking for better information to work with and I was trying to stimulate that thought.


If you love stochastics and make it into a profitable system for you then good for you!


I'm done with this thread.
unfortunately 'GRKFX' you got it all wrong ...you can see wit my trade .MR. Stoch is 'one" of my weapon of mass piping im 106 pips up on uj and it's still rocking....you got it wrong
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Respect a man, and he will do all the more.
  • #38
  • Sep 4, 2008 1:04pm Sep 4, 2008 1:04pm
Quoting urchman
unfortunately 'GRKFX' you got it all wrong ...you can see wit my trade .MR. Stoch is 'one" of my weapon of mass piping im 106 pips up on uj and it's still rocking....you got it wrong

THAT SETUP IS FOR FROM JAROO>>>>BEMAC>>>>AND GIVE ME A P!...PETER CROWNS ..IT'S REALLY FUN WHEN YOU FIND UR WAY INTO PROFITS.
Respect a man, and he will do all the more.
  • #39
  • Sep 4, 2008 1:31pm Sep 4, 2008 1:31pm
Only time stohastics work for me is on the 4hr Timeframe Setings (14, 3, 3) when it is less than 5 or more than 95. Price has to also has to have broken Channel or Trendline. These setups are rare, nearly always work.

In fact look at todays EURUSD, tommorow if price goes much lower than 1.4300 we could be looking for a possible Swing Trade, 4hr Stochastics would probably reach 10 level or so.

and don't think because the price has reached its weekly R3 1.4325 that it is bound to shoot up, anything can happen in Forex.
All Assets NAS100 GLD BTC AUS JPY GBP All Time Return: 19.7%
  • #40
  • Sep 5, 2008 1:40am Sep 5, 2008 1:40am
Quoting Phil_GMT
In fact look at todays EURUSD, tommorow if price goes much lower than 1.4300 we could be looking for a possible Swing Trade, 4hr Stochastics would probably reach 10 level or so.

and don't think because the price has reached its weekly R3 1.4325 that it is bound to shoot up, anything can happen in Forex.
Yeap... those simple and useful rules .

P.S. Green pips to all of you that will trade the NFP today.
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