What good is there with stochastics when you have RSI?

Greetings,

What good is there in stochastics when you have RSI to look for overbuy or oversold market WITH trend confirmation?

Please kindly enlighten me

~Noob

they kinda are similar indicators. I’m not exactly sure what the technical differences are but I can give you my interpretation.

RSI gives the overall trend. RSI > 50 is a strong up trend and RSI < 50 is a strong down trend.

Stoch give a similar indication. Whipping around and exiting the 30 line usually means that it’s got good buying strength. Whipping around the 70 means good selling strength.

I use RSI and Stoch together. If rsi is greater than 50 and stoch shows high buying strength then its a good trade potential. The opposite is true.

So I consider stoch’s to show current buying/selling pressure and RSI to show current trend strength.

What good is any indicator? All are lagging.

Hi,

regarding the stocastics, agree with you, only thing i think you missed is that in a trending market say for instance an uptrend, you will find the stoc sit above 70 for long periods.

Also what use are indicators? I know most of the major investment banks use them, and so do a lot of famous traders, including the turtles :wink: hope that answers that question.

Trading is never about your way or my way being better, its about creating something that works for you!

Happy trading

N

ANY INDICATOR is a GOOD indicator because everyone else is using it, whether it lags or not ---- the bar is serving pina colada’s for free, but you need the key to get in. Never mind that they could have left the door open, since everyone has a key — just that you dont, so you aint gettin the free pina or the lovely bikini babe who was waiting just for you !!!

Legions are the traders who will tell you all that is needed is price action and knowing support and resistance, and while s + r is an overriding factor in traveling thru the forex jungle, one must WAIT for a candle to develop, which simply means by the time you get a candle telling you to reverse, the price HAS ALREADY reversed — the stochastics will at least tell you when its ready to reverse, and using s+r including fib s+r, you can take profit to the pip !

the STOCHASTICS has a signal line and most RSI’s do NOT, and when scalping or working in overbought or oversold areas, that self same signal line keeps you on the right side of the trade, while the RSI has no little partner tagging along, allowing you to achieve max pipdum !

they be the same if you only use the normal “trigger” points for buy and sell, but in the advanced world, no one wants to be without the STOCHASTIC, cause the RSI cant tell you how much longer a move is going to go on.

enjoy and trade well

mp

[QUOTE=cadarkitek;74763]What good is any indicator? All are lagging.[/QUOTE

i use the RSI as a trend indicator (enter long if >50) and the stoch as a overbought/oversold indicator (i am wary of entering when stoch >80 or <20) but of course you will notice that in trends the stoch will indicate overbought/oversold. i take this to mean personally that i may have missed the entry.

Sure,They can distracts and overload information sometimes

Stochastic formula is based on the speed at which price has changed its good to confirm setups.

Great question and feed back guys, as I am a noob using RSI in my trading as well. My question is, because RSI uses closing price for its calculations (default), should I draw my swing high/low points from PA close or candlestick shadows for accuracy of divergence?

I wouldn’t use RSI and Stochastic together, because they are almost the same showing oversold and overbought levels.

I would suggest using a combination of a leading and a lagging indicator so you get an early signal then confirmation. Leading vs. Lagging Indicators

Wow haha not sure why and how this ancient thread was dug out, but I’ve since moved to trading chart patterns for some years already. Still, my thanks for your help :slight_smile: