Re: How to trade with an oscillator
Quote:
Originally Posted by Smart_trade View Post
From your chart also, the oscillator did not go in the overbought zone ie band above 80. The qualifiers come later. First the oscillator needs to go above 80....so no sell signal there.
Smart_trade
Once Stochastics goes into OB zone, its effect of yesterdays and todays OS zone more than 5 candles gets nullified.
In my chart till the last candle the oscillator has still not gone into OB region...but if tomorrow it goes into OB zone, stays there for less than 5 bars and comes out, gives a downclose bar and the low of the downclose bar is cracked....that will be a sell signal with swing high as a stoploss.
Smart_trade
03:45 PM 6th june 2011
ST,
http://imgur.com/pkhNN
I am Confused on two of your above statements . plz clear my confusion.
Thanks for your time and patience in answering my queries.
Quote:
Originally Posted by Smart_trade View Post
From your chart also, the oscillator did not go in the overbought zone ie band above 80. The qualifiers come later. First the oscillator needs to go above 80....so no sell signal there.
Smart_trade
Once Stochastics goes into OB zone, its effect of yesterdays and todays OS zone more than 5 candles gets nullified.
In my chart till the last candle the oscillator has still not gone into OB region...but if tomorrow it goes into OB zone, stays there for less than 5 bars and comes out, gives a downclose bar and the low of the downclose bar is cracked....that will be a sell signal with swing high as a stoploss.
Smart_trade
03:45 PM 6th june 2011
ST,
http://imgur.com/pkhNN
I am Confused on two of your above statements . plz clear my confusion.
Thanks for your time and patience in answering my queries.
The pre-requisite to get a sell signal is that the Oscillator should first of all go to OB region. Similarly, the pre-requisite to get a buy signal is that the Oscillator should go to OS region in the first place. After that only, you please check for the other conditions - whether they are satisfied or not.
The above pertains to normal buy/sell signals....
Whenever oscillator stays in OB/OS zone for 5 bars and above, it shows excessive OB/OS condition and this excessive pressure needs to be dissipated. So the oscillator come out of the OB/OS zone for a few bars and goes in OB/OS zones or nearabouts once again. (Here we may observe divergence on the chart.) But in the process of this dissipation of excessive buying/selling pressure, if the oscillator goes in the opposite side zone ( suppose it is excessive OB and id goes to a oversold zone) then the effect of that excessive OB/OS excessive pressure gets nullified.
I hope both the statements are clear now.
Smart_trade