How to trade with an oscillator

[murthyavr]

Hi Smart Trade,

Thanks for all your efforts to educate us all on proper use of oscillators.

I tried to test this method on demo yesterday on Nifty future 5 mins chart and on both of my entries experienced loss.

Can you please point out what did i do wrong?

Thanks

Rahul

Your chart doesn't contain the prices on Y-axis, Time/Date on X-axis, name
of the scrip, interval etc. None of them..!

(Just curious - which software is this?

Coming to your first trade: even if I assume that all the 6 qualifiers were met,
when is the low of the green candle broken and where did you enter into a
short? Looking at the green bar shown by you, there was no way to enter
into a trade, since the low was not broken.

Similarly in the second case: even if one has to assume that all the 6 qualifiers
were met, the high of the candle was not broken at all and you couldn't have
entered into a trade.

I think you need to go through the first few pages of this thread again and
again, and keenly look at the charts posted..

 

[Smart_trade]

Hi Smart Trade,

Thanks for all your efforts to educate us all on proper use of oscillators.

I tried to test this method on demo yesterday on Nifty future 5 mins chart and on both of my entries experienced loss.

Can you please point out what did i do wrong?

Thanks

Rahul

Your chart looks totally different from my Nifty Future 5 min chart....in my chart I dont see these trades...

Go through first few pages of the thread....buying when the oscillator is in overbought zone for more than 5 bars means you have to buy at the earliest opportunity of a pivot etc and with the full understanding that you are buying the momentum which will continue for few more bars...so it is a quick entry and exit on the momentum....and be prepared for the momentum to reverse anytime.

Smart_trade

 

[gambler]

Your chart looks totally different from my Nifty Future 5 min chart....in my chart I dont see these trades...

Go through first few pages of the thread....buying when the oscillator is in overbought zone for more than 5 bars means you have to buy at the earliest opportunity of a pivot etc and with the full understanding that you are buying the momentum which will continue for few more bars...so it is a quick entry and exit on the momentum....and be prepared for the momentum to reverse anytime.

Smart_trade

But how could one analysis that momentum will continue for few more bars????

 

[4xpipcounter]

Gambler, maybe this chart will help. The vertical line shows the point where the stochastics crossed in OB territory. After the fact, I drew the TL. The 4-hour chart made that point stand out as a swing low. Comparatively speaking, it is still near the top on the daily (this chart).
Once you get the crossover, and then add a confluence of a chart support break, from that point, count on the trend lasting 5 candles or more.

I think if you use the stochastics by itself, it will lie to you. When it becomes OB/OS or you get your cross at specified areas, I like to use it as an antenna: "Well it crossed at 85-90. Now what other possible indications do I have of the reversal?"

Here's the other point. The stochs is entering OS territory, but it is still open-mouth. Another chart indication you can use is the TL. That TL was broken, Inevitably, after it is broken, there will be a correction back to i and then it will continue in the downtrend. With that knowledge, we also know the downtrend will continue a few more candles. In addition, we also know the stochs is going to be very OS at a given point, because it is close to it now, and with the TL break, we know the downtrend will continue a few more candles.

I did not want to lead this thread off on a tangent chart S&R's, TL's, etc, but using your stochastics as the antenna, along with the chart S&R's and/or TL's, you will then know that from that point the trend is going to last 5 or more candles.

I love the ichimoku, as it is my favorite indicator, but I use these setups many times for many profitable trades. I know if the daily chart carried the obviation , then I knew it was going to be a few days I was going to be in that trade. Many times the 5-min is used in this thread. Along with the great information that is being taught here, you can now use the same principles I mentioned and apply it on your 5-min.

free image hosting

 

[rrd6f4]

Thanks Murthy and Smart Trade for the reply. I have read all the pages, but i will read one more time. Then if I have any questions, i will post it with more clear charts.

Regards,

Rahul

 

[rangarajan]

Gambler, maybe this chart will help. The vertical line shows the point where the stochastics crossed in OB territory. After the fact, I drew the TL. The 4-hour chart made that point stand out as a swing low. Comparatively speaking, it is still near the top on the daily (this chart).
Once you get the crossover, and then add a confluence of a chart support break, from that point, count on the trend lasting 5 candles or more.

I think if you use the stochastics by itself, it will lie to you. When it becomes OB/OS or you get your cross at specified areas, I like to use it as an antenna: "Well it crossed at 85-90. Now what other possible indications do I have of the reversal?"

Here's the other point. The stochs is entering OS territory, but it is still open-mouth. Another chart indication you can use is the TL. That TL was broken, Inevitably, after it is broken, there will be a correction back to i and then it will continue in the downtrend. With that knowledge, we also know the downtrend will continue a few more candles. In addition, we also know the stochs is going to be very OS at a given point, because it is close to it now, and with the TL break, we know the downtrend will continue a few more candles.

I did not want to lead this thread off on a tangent chart S&R's, TL's, etc, but using your stochastics as the antenna, along with the chart S&R's and/or TL's, you will then know that from that point the trend is going to last 5 or more candles.

I love the ichimoku, as it is my favorite indicator, but I use these setups many times for many profitable trades. I know if the daily chart carried the obviation , then I knew it was going to be a few days I was going to be in that trade. Many times the 5-min is used in this thread. Along with the great information that is being taught here, you can now use the same principles I mentioned and apply it on your 5-min.

free image hosting

Very good reply for amateurs like me who r wedded to Stochastic after reading Smart.

Pl clarify the significance of yr highlighting the low of the candle which made PH.
Is it s/l for short

 

[4xpipcounter]

That was a swing low, and it was more visible on the 4-hour chart. Once you get a break of a swing low or high, you can some very swift price action.
Add that fact to what your eye has already been trained to see on the stochastics. Smartrade has also trained you in his 5-candle concept. With the break of the swing low and the stoch crossover, you now have the perfect recipe for a 5 or more candle move in the direction you are looking for that was originally indicated by the stochastics OB condition, and then its crossover.
With regards to the stop, once the swing low was broken, the peak is the SL. Once the TL is broken the peak of the candle that broken the TL is the SL. In essence, if the original trade was made, you now have a SL lower than the original entry which guarantees a winner.

Very good reply for amateurs like me who r wedded to Stochastic after reading Smart.

Pl clarify the significance of yr highlighting the low of the candle which made PH.
Is it s/l for short

 

[timepass]

Would you guys say that this one is poised for a big upside ?? There is a clear divergence on the stochs, and on the candles there is a definite break of the trendline.

 

[murthyavr]

Would you guys say that this one is poised for a big upside ?? There is a clear divergence on the stochs, and on the candles there is a definite break of the trendline.

There is a bearish cross-over of stoch on Weeklies.

So, trade based on the divergence on dailies may not be a highly rewarding
trade. The price may reach upto the weekly TL, at the max.

In my limited experience, I observe that taking confirmation from a higher TF
is essential for stoch-based trades. Such confirmation will give a high probability set-up.

 

[tomjerry]

Would you guys say that this one is poised for a big upside ?? There is a clear divergence on the stochs, and on the candles there is a definite break of the trendline.

TP, this Tuesday IMF chief Christine Lagarde is coming to India. She can answer this most difficult question easily .

Anyway, Greece's bailout approved ahead of march 20 deadline and now Greece has to pay something in double digit billions! Last week was important for Indian market and next week seems important for international market.