PDA

View Full Version : Stochastics



CarinaBrac
01-02-2016,
A technical indicator that compares where a security's price closed relative to its price range over a given time period. The sensitivity to market movements can be reduced by adjusting the number of time periods or by taking a moving average of the result. This indicator is calculated by using the following formula:

%K = 100[(C – L14)/(H14 – L14)]


C = the most recent closing price
L14 = the low of the 14 previous trading sessions
H14 = the highest price traded during the same 14-day period.

Donaldhok
01-03-2016,
The theory behind this indicator is that, in an upwardly trending market, prices tend to close near their high. Whereas, during a downward trending market, prices tend to close near their low. Transaction signals occur when the %K crosses throgh a 3-period moving average called the %D.

Thats all greek to me. As many of you may know this is one of my favorite indicators. Almost every chart I post has a reference to the stochs. I look for trends where the stock has bottomed and sold off at before. I look for the crossover for a change in the current trend and a possibe entry point. But again there are other factors before I just pull the trigger.

Lets take a look at microsoft. I bought microsoft on monday and sold thursday. I didn't make a lot of money but I made some. MSFT was an easy call so plese check out the chart and it shows you what I am talking about. If you want to look at a similar chart check out NOK nokia.

Dfxysrs
01-03-2016,
I read stockcharts bit and basically what I got was that you wait for two consecutive moves above or below the 80 or 20 respectively before you can determine if a reverse trend is about to happen but that it's not always the case.

dpsohxjm15
01-04-2016,
I looked at the stochs on the linked chart example. I was able to see that on the slow stoch somewhat but the fast stoch is just too whipsawed for me to make heads or tails out of for any indicators. I realize these things have to be looked at with other indicators. But stochs seems a tough one to get any indicators from for me. The full stoch looked exactly like the slow stoch so I don't really see where those two are used in coordination with each other. But I have to read some more on stochs. They seem a little more complicated for me to grasp than RSI which I find myself looking at alot for overbought and over sold signs.

Earnestine
01-06-2016,
looks like someone has been studying. great observation! i will watch fast sto but it is low priority for me on indicators but it helps in that it is just another comformation of change. i found for me while learning is work on one indicator at a time and as i get the grasp of them like you have on the sto's i ad them to my charts. good job money!

admin
06-01-2016,
Ye last year was my first full year of trading and with little more than 2500 I was able to make over 1000 trades. I also trade heavily in the paper trading account on Thinkorswim. Doing that and burying myself in information I've learned more in the last year than I thought was even possible.

At first I went through a lot of books, watched a lot of youtube vids. Watching John Kurisko got me hooked and gave me a good launch pad for learning charts, price action etc. But in the end I spent most of the last year watching or listening to Tastytrade every day and going through the archives over and over again. The strategies and understanding the numbers with probability based trading is just what appeals to me.

Option strategies will allow you to make a lot of trades while defining your risk as it suits you. With a small account it is hard to keep your head above water as defined risk trades have a lower probability than the undefined risk trades but you will learn a lot. And it does work just like it should if you pay attention to liquidity, volatility, etc. and stay mechanical.