Stochastics
- Thread starter shortorlong
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Quote from yoohoo:
Well, it's Easter and I'm in a generous mood. Here's an example of the power of stochastics to qualify Price Action signals. This is a 2 minute chart and demonstrates how stochastics will not only tell the exact reversal bar, but also qualify the importance of the top or bottom.
When the stochastic "vapourises" the reversal is minor. When the stochastic takes on a more solid look the reversal is more significant.
I've deleted lots of goodies that are acting on the price action, and others indicators that harmonise with the stochastics to keep this naked study very simple.
I always marvel at the dummies that don't understand that everything works... it's down to your skill to develop and use all that's available.
By all means use naked price action alone and trumpet that indicators lag and live in a cave if you must. Reading Price Action is an essential trading skill, but as I said before, it's philistine to think the world ends there. Indicators tell the zone, importance of the reversal and exact entry WITHOUT LAG!
Your homework is working out what I've done... it's not Christmas
I'm pretty new at trading, only a couple months. From what I can see though, it looks like different period stochastics are being used similar to how an MA cross-over system might be used. Line up a half-dozen or so stochastics at different speeds, and look for faster stochastics to cross over the slower ones. A plurality of fast stochastics crossing slower ones signals a stronger move.
In terms of what actual periods are being used, I think there are 2 sets that stand out. One set is a group of fast lines all within proximity of one another, the other set is a group of slow lines all within proximity but meaningfully slower than the first set. What I mean is, there appear to be 2 distinct 'flocks' of lines moving in 2 groups.
Let me see if I can set something like this up.
Thanks for sharing your chart and trading concepts with the newer traders who are looking to find their way.Quote from yoohoo:
Well, it's Easter and I'm in a generous mood. Here's an example of the power of stochastics to qualify Price Action signals. This is a 2 minute chart and demonstrates how stochastics will not only tell the exact reversal bar, but also qualify the importance of the top or bottom.
When the stochastic "vapourises" the reversal is minor. When the stochastic takes on a more solid look the reversal is more significant.
I've deleted lots of goodies that are acting on the price action, and others indicators that harmonise with the stochastics to keep this naked study very simple.
I always marvel at the dummies that don't understand that everything works... it's down to your skill to develop and use all that's available.
By all means use naked price action alone and trumpet that indicators lag and live in a cave if you must. Reading Price Action is an essential trading skill, but as I said before, it's philistine to think the world ends there. Indicators tell the zone, importance of the reversal and exact entry WITHOUT LAG!
Your homework is working out what I've done... it's not Christmas
I have a similar philosophy when it comes to trading, and my charts, though different in form, have the exact same feel as your chart does.
Happy Easter
Here's a little oil for you ... whow, this stuff just seems to work on everything! :eek:
The long and short of it is that I trade more than one market at a time. To do this effectively I color code the different charts, and their respective NinjaTrader DOMs as well.
Anyone who has done it before knows that scalping three charts simultaneously is extremely difficult ... it's like bartending at a high-end, super fast paced night club. You have to know where everything is located, and what it is doing, by heart. Just saying "Oh, I'll trade by price action alone" would be financial suicide in this case.
Hope you get it.
Good trading.
Mandel - what do you figure is happening in yoohoo's image? What do you think the different configurations for the stochs in his image might be?
I was reading some books on stochs yesterday and started to understand the difference between Fast and Slow stochs - I think all of yoohoos are slow..
I tried a replay session last night with one of my indicator panels showing 4 stochs:
2,10,7
3,14,7
4,18,7
5,20,7
First number is %K # of bars, second is %D # of bars, third is the 'smoothing # of bars'. This is in Ninjatrader. I'm *think* that the third number (7 in all cases here) is an averaging number applied to the %D line.
I started to get similar things to what yoohoo is showing, but the 2,10,7 stoch is all over the place - too fast.
Anyone see a better set of numbers than the 4 I posted here?
I was reading some books on stochs yesterday and started to understand the difference between Fast and Slow stochs - I think all of yoohoos are slow..
I tried a replay session last night with one of my indicator panels showing 4 stochs:
2,10,7
3,14,7
4,18,7
5,20,7
First number is %K # of bars, second is %D # of bars, third is the 'smoothing # of bars'. This is in Ninjatrader. I'm *think* that the third number (7 in all cases here) is an averaging number applied to the %D line.
I started to get similar things to what yoohoo is showing, but the 2,10,7 stoch is all over the place - too fast.
Anyone see a better set of numbers than the 4 I posted here?
Google Buffy's B-Line and start reading ... it'll takea while for you to grasp it, but that's a good place to start if you like using the ribbon stochastics concept.
But as you can see with my charts, I love to KISS!
Lets take a random day in the Ten Year Notes and see if stochastics are still work'in for me ...
Yep, looks that way.
Boy oh boy, am I looking forward to next week!
Happy Easter everyone.
Yep, looks that way.
Boy oh boy, am I looking forward to next week!
Happy Easter everyone.