Hi, I want to know. How to use stochastic indicator to detect trend changing? Someone from this forum did mentioned this to me, but I still don’t get the idea?
All it really does is show a close above of below a moving average that is specified in the settings.
Here is a pic I put together
Here you can find everything you need about Stochastic Oscillator.
Stochastic Oscillator [ChartSchool]
What Moving Average is that? Exponential? Simple?
Hi Azlan00IM, those are Simple, on the close. Just keep in mind, these SMAs are just representation of past price action.
50 SMA is a strong Trend indicator, and I think should be considered in any strategy. You must also note that nothing is foolproof in Forex. you can take the crosses and such, but sometimes the SMA’s show consolidation by squeezing together, or agreeing. And in forex, price hates to be in agreement. So from that point, it can continue, or breakout. Learning to read heatmaps or Correlation with the entire basket of currency pairs is vital, I think. So, finding tops and bottoms are more important then the cross. Reading the gaps between the SMAs can also be another way to gauge future movements, which act kinda like a recoup of energy, getting ready to move again once it catches its breath, you can say…
By reading the stoch, your seeing Oversold or over bought. But sometimes, they represent momentum. Sometimes it shows a top, usually in a range market or consolidation period, and other times, it represents the beginning of a momentum move and continuation in the current direction, and in most cases, moves swiftly.
So, the most important thing about all this, is being able to adapt to the current price action as soon as you can. Adaptation is the most IMPORTANT trait you must have in Forex. Sure, at some point, Psychology plays a great role, but adapting to the situation is of greater need.
Practice, Practice, Practice
Best of Luck
I also want to add this,
We are not in the Predication business, we are in the Reaction business.
Read and react, not read and predict.
A forex trading tip used by many traders is to implement a consistent form of technical analysis. Learn to trade forex by using a simple method.
Can you elaborate more on that?
Are you stating that because most traders lose, that you shouldn’t use technical analysis?
It definitely shouldnt be used exclusively, as you can make a Sell signal a buy signal just by changing timeframes in which you trade by looking at the same indicators.
Will this indicator gives false signals or something on certain times? Like when inactive times or something?
Hi bud, thats what I meant by Range market, ( Inactive) or consolidation, which means the same thing.
Is there any way to figure out when the trend changes, for example specific time or something? Oh also, does this apply on certain time frames only? For example H1 or above?