Stochastics
- Thread starter shortorlong
- Start date
Quote from MandelbrotSet:
Good question.
The answer lies iin studying volume and how it relates to price ... oh no, here comes another round of flames.
I like studying volume price relationships.
But WTF does that have to do with my question about stochs, since stochs do not measure volume?
Quote from Lucrum:
I feel like a market is "over bought" when there are no longer a sufficient number of buyers anxious enough to buy that they are collectively willing to lift enough offers to drive prices higher. And of course "over sold" would be the opposite.
Now maybe someone can explain how the following equations accurately determine the over bought or over sold condition of a market. Particularly when, as far as I can tell, it does not measure any actual buying or selling to begin with.
%K = 100 [ ( C - L5 ) / ( H5 - L5 ) ]
%D = 100 x ( H3 / L3 )
I use the originator's three equations instead of those that you proferred.
Lane followed DOW in inventing indicators for market analysis. About 25 years later the MACD followed.
Before Lane, Magee was writing for financial piblications and later assembled, with Edwards one of the standards today. reading the In Memorium to Magee in the front of the 7th Edition is worthwhile.
The original %K and %D have been nodified as well. A blending took place. You may want to find Lane's work and its subsequent refnements.
In your first paragraph, commenting on the paragraph only, what is written has it backwards. Who is in control of price is different than stated.
For anyone who wants to see what is going on, it would be a good idea to bring up the DOM (Display it in real time). Since I trade commodities, I would recommend the ES DOM. What is the most active and dynamic part of trading and price movement comes from orders not executed rather than orders executed. To understand what I just said consider the orders that are added and the orders that are pulled. Do this, especially in reference to the T&S sizes showing on the tape. segregating the T%S orders by trader size and wealth is a good idea too. In this way you will see just who matters and who doesn't.
The second paragraph, as written, states that buying and selling values are not mentioned. C, H, and L are trading values.
Lane figured out many things and THEN he designed an indicator for two separate applications where the indicator was the same but the reading of the indicator was different.
For him the most important trading value was the most recent value and so he symbolized it as a trading value called the last value (close).
He used a dual approach as well. That is he ran two Stochastics at the same time and on differing charts that differed by the bar length.
The key first value determination to set up a fractal, in his mind, was making the Stochastic harmonize with the fractal. For ES none of the equations posted have these values and, further, the equations are different than any of Lane's.
I use the Stochastic as a leading indicator of price for one type of trading that I do: crossover trading. The advantage lies in taking a position in the pm before the next day's opening gap. For example four such individual trades, compounded were 289% and required 12 days of the year.
The key for this success was knowing that I had the stochastic harmonized with the equity and I knew how the "raw equation" of the Stochastic "brings out" the realtion of the Close to the range of the price and, correspondingly, it's volatility. Knowing all of this makes my timing very expert.
For ES, the duality and the emphasis of the Close, being at play allows me to front run other traders and always be pushed by their lagging trading. The Stochastic has about 15 signals to regard. You mention two. As a beginner, you have a lot to learn. So far, you have never done any studying. And you have no notes or records.
for making money, Lane used, in both applications, the over bought and undersold Stochastic condition as a hold signal. The principle means of making money is holding.
the relationship of the EXIT signal on one of the dual Stochastics slightly precedes the ENTER signal on the other of the dual Stochastics. This window is important to Lane. From then (the 50's) until '79 when the MACD came to measure the same window, there were no other alternatives except for Lane's work.
It is 50 years later and the PC has been invented and so has C# emerging from the original C at Murray Hill of BTL.
Nothing has changed for the Stochastics. It's utility remains as always.
there is a myth about trading that goes like this: If eveyone learns what you are doing what you do will not work anymore. this myth is silly as are most of the comments throughout this entire thread.
You get a chance to see, clearly, that you are nowhere in the infinite scheme of things. That is not going to change...
I feel like a market is "over bought" when there are no longer a sufficient number of buyers anxious enough to buy that they are collectively willing to lift enough offers to drive prices higher. And of course "over sold" would be the opposite.
Now maybe someone can explain how the following equations accurately determine the over bought or over sold condition of a market. Particularly when, as far as I can tell, it does not measure any actual buying or selling to begin with.
%K = 100 [ ( C - L5 ) / ( H5 - L5 ) ]
%D = 100 x ( H3 / L3 )
I use the originator's three equations instead of those that you proferred.
Lane followed DOW in inventing indicators for market analysis. About 25 years later the MACD followed.
Before Lane, Magee was writing for financial piblications and later assembled, with Edwards one of the standards today. reading the In Memorium to Magee in the front of the 7th Edition is worthwhile.
The original %K and %D have been nodified as well. A blending took place. You may want to find Lane's work and its subsequent refnements.
In your first paragraph, commenting on the paragraph only, what is written has it backwards. Who is in control of price is different than stated.
For anyone who wants to see what is going on, it would be a good idea to bring up the DOM (Display it in real time). Since I trade commodities, I would recommend the ES DOM. What is the most active and dynamic part of trading and price movement comes from orders not executed rather than orders executed. To understand what I just said consider the orders that are added and the orders that are pulled. Do this, especially in reference to the T&S sizes showing on the tape. segregating the T%S orders by trader size and wealth is a good idea too. In this way you will see just who matters and who doesn't.
The second paragraph, as written, states that buying and selling values are not mentioned. C, H, and L are trading values.
Lane figured out many things and THEN he designed an indicator for two separate applications where the indicator was the same but the reading of the indicator was different.
For him the most important trading value was the most recent value and so he symbolized it as a trading value called the last value (close).
He used a dual approach as well. That is he ran two Stochastics at the same time and on differing charts that differed by the bar length.
The key first value determination to set up a fractal, in his mind, was making the Stochastic harmonize with the fractal. For ES none of the equations posted have these values and, further, the equations are different than any of Lane's.
I use the Stochastic as a leading indicator of price for one type of trading that I do: crossover trading. The advantage lies in taking a position in the pm before the next day's opening gap. For example four such individual trades, compounded were 289% and required 12 days of the year.
The key for this success was knowing that I had the stochastic harmonized with the equity and I knew how the "raw equation" of the Stochastic "brings out" the realtion of the Close to the range of the price and, correspondingly, it's volatility. Knowing all of this makes my timing very expert.
For ES, the duality and the emphasis of the Close, being at play allows me to front run other traders and always be pushed by their lagging trading. The Stochastic has about 15 signals to regard. You mention two. As a beginner, you have a lot to learn. So far, you have never done any studying. And you have no notes or records.
for making money, Lane used, in both applications, the over bought and undersold Stochastic condition as a hold signal. The principle means of making money is holding.
the relationship of the EXIT signal on one of the dual Stochastics slightly precedes the ENTER signal on the other of the dual Stochastics. This window is important to Lane. From then (the 50's) until '79 when the MACD came to measure the same window, there were no other alternatives except for Lane's work.
It is 50 years later and the PC has been invented and so has C# emerging from the original C at Murray Hill of BTL.
Nothing has changed for the Stochastics. It's utility remains as always.
there is a myth about trading that goes like this: If eveyone learns what you are doing what you do will not work anymore. this myth is silly as are most of the comments throughout this entire thread.
You get a chance to see, clearly, that you are nowhere in the infinite scheme of things. That is not going to change...
I think people who adheres to the ''momentum leads price'' myth are the same who would be impressed by this chart
HG, you've managed to remove Goinglite from this thread. Well done! I've known Going for a few years. He's one of the best and most creative traders I've ever met. We respect each other and out of that we share privately a little of our edge.
It's a pity, because he might have shown a little more of his unique work and inspired others to apply themselves to understanding that indicators work, but not as canned set ups.
You poo poo the use of volume and with it the work of Wyckoff and Story, my mentors and inspiration for adding volume to the candles. It works, amazingly well - but I'm not posting the real breakthrough here - it's unique to me so why should I?
For those who seek, read The Undeclared Secrets That Move The Market for a concise introduction.
One thing that success brings is respect. A Wise Man once said, don't thown pearls before swine, for they will trample them underfoot and turn and attack you. If the hat fits...
I've managed a fund well into 8 figures, now I have one client - e. I have created unique approaches to TA. I incorporate PA with trendlines that start well away form price, but having fixed points in time and space. My indicator set ups are a lifetimes work, and they have zero lag.
I have demonstrated how Moving Averages can be set up so they do not lag... how they project future S&R levels.
The forces acting on price, that await it's arrival, are truly manifold... dynamic S&R that kicks PA. In 20 years I am still making discoveries and breakthroughs.
Unlike Goinglite, who is a chess grandmaster and possesses a fine mathamatical mind, I am next to hopeless at maths. However I am extremely creative and I know an ex-NASA rocket scientist trader who loves my creativity and converts it into math and code.
Honestly, I cannot answer someone who wants to know how a math formula can predict anything. But I sure know how to develop compound indicators and make them work.
I mentioned how marketmakers communicate with each other using 10 minute bars and my thread was deleted. No moderator can tell me why nor where it's gone.
HG, you are using an old technique that works, up to a point. But your attitude ensures you have reached your limitations. But I need people like you. I buy and you follow and push my price up and onward.
If P&F was at the leading edge, if PA was the bleeding edge, the big institutions would all use it. They use mathamatical models. Indicators are the poor mans math tools, but they have enormous power if tweeked. It can come extremely close to what they have.
Well I guess I too have also reached my limitations in this thread. But let me assure the seeker, a simple stochastic can be tweeked to have zero lag and superimposed on a bigger stochastic will make a super tool. Don't be restricted to time. Try range
Good luck and good trading all.
It's a pity, because he might have shown a little more of his unique work and inspired others to apply themselves to understanding that indicators work, but not as canned set ups.
You poo poo the use of volume and with it the work of Wyckoff and Story, my mentors and inspiration for adding volume to the candles. It works, amazingly well - but I'm not posting the real breakthrough here - it's unique to me so why should I?
For those who seek, read The Undeclared Secrets That Move The Market for a concise introduction.
One thing that success brings is respect. A Wise Man once said, don't thown pearls before swine, for they will trample them underfoot and turn and attack you. If the hat fits...
I've managed a fund well into 8 figures, now I have one client - e. I have created unique approaches to TA. I incorporate PA with trendlines that start well away form price, but having fixed points in time and space. My indicator set ups are a lifetimes work, and they have zero lag.
I have demonstrated how Moving Averages can be set up so they do not lag... how they project future S&R levels.
The forces acting on price, that await it's arrival, are truly manifold... dynamic S&R that kicks PA. In 20 years I am still making discoveries and breakthroughs.
Unlike Goinglite, who is a chess grandmaster and possesses a fine mathamatical mind, I am next to hopeless at maths. However I am extremely creative and I know an ex-NASA rocket scientist trader who loves my creativity and converts it into math and code.
Honestly, I cannot answer someone who wants to know how a math formula can predict anything. But I sure know how to develop compound indicators and make them work.
I mentioned how marketmakers communicate with each other using 10 minute bars and my thread was deleted. No moderator can tell me why nor where it's gone.
HG, you are using an old technique that works, up to a point. But your attitude ensures you have reached your limitations. But I need people like you. I buy and you follow and push my price up and onward.
If P&F was at the leading edge, if PA was the bleeding edge, the big institutions would all use it. They use mathamatical models. Indicators are the poor mans math tools, but they have enormous power if tweeked. It can come extremely close to what they have.
Well I guess I too have also reached my limitations in this thread. But let me assure the seeker, a simple stochastic can be tweeked to have zero lag and superimposed on a bigger stochastic will make a super tool. Don't be restricted to time. Try range
Good luck and good trading all.
you can build models using indicators.
Indicators can be very useful if you are aware of their limitation and drawbacks, and compensates for them using something else.
Quote from silvermotion:
I think people who adheres to the ''momentum leads price'' myth are the same who would be impressed by this chart
Regarding your MACD screenshot. What good does it tell you to know 3 months in advance ? In the meantime you took heat and made no money.
It's impossible to be faster than price. When you think an indicator tells you in advance, that's probably a glitch due to some retracement that made it look like that.
There is no crystal ball and yes I realize you were mocking traders on your screenshot.
Susana