Instead of me explaining what the Stochastic indicator is about, here’s what the founder of Stochastic has to say…
“Stochastic measures the momentum of price.
If you visualize a rocket going up in the air – before it can turn down, it must slow down.
Momentum always changes direction before price.” – George Lane
In other words:
The Stochastic is an indicator that measures momentum in the markets.
And for you math geeks out there, here’s the formula to calculate it…
%K = (Current Close – Lowest Low) / (Highest High – Lowest Low) * 100
%D = 3-day SMA of %K
Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%K is multiplied by 100 to move the decimal point two places
Are you confused? Hahaha.. no worries, you can use the default value on it. and we will share to you as well what we are using.
So below are the suggested value you can use to verify your entry reversal entry and you see the support and resistance indicator.
So, you only enter Sell trade once the Stochastic Oscillator is passing by 70 points on overbought levels moving to downward portion and Buy trade once 30 points on oversold level moving upward position.
Is it looks complicated? No worries get the video below how this settings works.
All the while, you have to monitor this Signal indicator in order for you to get the good entry.
But, what if you can use it Automated? by using Robot EA, you can automate it every entry of this indicator.
If you need it on Automation mode, download it on below link. Just add your e-mail address to send the copy to you.
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