Dear fxmen,
Stochastic Oscillator is my main trading tool, and I have discovered various interesting things about it lately. One of them is that actually sometimes hitting the overbought/sold i.e. the extreme levels of 80/20, is not necessary for the oscillator to produce signals, but only that the turn must be a sharp one (or as some call it, narrow top/bottom). I think this is because a small swing on the stoch (i.e. those swings that doesn’t touch the extreme levels) in one time frame is a simply big swing (those that hits the extreme levels) on another smaller time frame. For example, a small swing on the 15m frame is a big swing on the 1m frame. Thus one need not wait for big swings on the 1m stoch (which, at certain times will require you to wait very long, if you are trying to use a multiframe strategy to lower risk) , but only need to a) identify the last big swing to determine the trend direction b) use the small swings as signals to enter. This is probably only useful for scalpers with limited margin. But has anyone here observed this before? Or have you read any article or book that touches on this? I need to find some confirmation and clarification on it, so that I can apply it more confidently.
Thanxxx!
Where the term “never” is A) an absolute and therefore automatically fallible and B) applied to situations that occur more than once, unlike the ONE time something is created, that reply is straight daft.