How to trade with an oscillator

[Smart_trade]

ST,
on 30 min TF osc which has stayed for more than 5 cndles in OS and if osc goes into OB and if it stays for one candle in OB and comes out OB zone on next candle and still should we consider that OS signal as nullified ? Plz explain and thnks for your reply on my ealier questn

Yes...once it goes in OB even for 1 bar....its earlier excessive OS reading ( > 5 bars ) gets negated....

Actually after staying for more than 5 bars in OS zone , once oscillator crosses 50 % line from below ..its significance of over sold is null and void really....

ST

 

[krish4166]

but if tomorrow it goes into OB zone, stays there for less than 5 bars and comes out, gives a downclose bar and the low of the downclose bar is cracked....that will be a sell signal with swing high as a stoploss.

Smart_trade
ST,
1)Today's 30 min Bar 10:30 am and 11:00 am both are downclose, on which downlcose bar shoud we have sold ?
2)below 10:30 am bar below or 11:00 am downclose bar and also plz tell us what is the filter to be given either 10:30 am downclose bar or 11:00 downclose bar.
3)As our understnding goes it should be 10:30 downclose bar. is it crrct.
4)Stchts on 30 min at 10:30 am and 11:30 am was on sell mode.
5)trading results slowly improving. thnks for your regular unselfish support.

 

[Smart_trade]

but if tomorrow it goes into OB zone, stays there for less than 5 bars and comes out, gives a downclose bar and the low of the downclose bar is cracked....that will be a sell signal with swing high as a stoploss.

Smart_trade
ST,
1)Today's 30 min Bar 10:30 am and 11:00 am both are downclose, on which downlcose bar shoud we have sold ?
2)below 10:30 am bar below or 11:00 am downclose bar and also plz tell us what is the filter to be given either 10:30 am downclose bar or 11:00 downclose bar.
3)As our understnding goes it should be 10:30 downclose bar. is it crrct.
4)Stchts on 30 min at 10:30 am and 11:30 am was on sell mode.
5)trading results slowly improving. thnks for your regular unselfish support.

Krish,

In my chart, the oscillator did not go above 80...it came very close ( max was 79.6) but I wont be that rigid....and will consider it as OB.

10:30 was a downclose bar...and sell below the low of 10:30 bar ...Stoploss at 10:00 bar high...which is hit and trade closed.

Smart_trade

 

[krish4166]

ST,
What is filter to be given after we see downclose or upclose bar and as per qualifiers.Plz eplan

 

[Smart_trade]

ST,
What is filter to be given after we see downclose or upclose bar and as per qualifiers.Plz eplan

Keep 5-7 points as a filter when you trade larger timeframes such as 30 min in which case this short trade does not trigger. When trading 5 min keep 2-3 points as a filter just to avoid few whipsaws...

ST

 

[timepass]

Still trying to understand divergences. Simplistically, I understand that a divergence is created when the candles are trending one way and the oscillator is trending the other way..?? theek hai kya?

What kind of divergence would this be, if any?

 

[murthyavr]

ST:

According to my understanding of this thread, the summary is like this:

1. If the oscillator stays for more than 5 bars in OB or OS, then the trend is strong and the scrip is likely to be bullish (if in OB zone) or bearish (if in OS zone).

2. If the oscillator enters OB or OS zone, stays for a while (not for more than 5 bars), and then comes out of that zone - then there are 6 qualifiers to enter into a trade.

I hope I am correct till now.

Are these two concepts inter-related?
(If so, scrip staying in OB/OS > 5 bars and then going to the opposite zone should be considered as a pullback?)

Or, they have to be treated as separate cases?
(If so, the status of Bullish/Berish basing on OB/OS>5 bars status gets cancelled once the oscillator reaches the opposite zone.)

Thanks ST for your patience and also for your readiness to help!

 

[Smart_trade]

ST:

According to my understanding of this thread, the summary is like this:

1. If the oscillator stays for more than 5 bars in OB or OS, then the trend is strong and the scrip is likely to be bullish (if in OB zone) or bearish (if in OS zone).

2. If the oscillator enters OB or OS zone, stays for a while (not for more than 5 bars), and then comes out of that zone - then there are 6 qualifiers to enter into a trade.

I hope I am correct till now.

Are these two concepts inter-related?
(If so, scrip staying in OB/OS > 5 bars and then going to the opposite zone should be considered as a pullback?)

Or, they have to be treated as separate cases?
(If so, the status of Bullish/Berish basing on OB/OS>5 bars status gets cancelled once the oscillator reaches the opposite zone.)

Thanks ST for your patience and also for your readiness to help!

murthyavr,

Points 1 and 2 are correct.

When oscillator stays in overbought region for 5 bars or more, it is called excessive overbought phase and it needs time to dissipate the energy.So when after 5 bars, it comes out of the OB zone, it is not a low risk sell entry, the market may make another 2-3 bars is correction and make a new high and we try to buy this correction instead of selling.

But when market stays in overbought region for very long time say for 8-9 bars or more, the buying force fizzles out...hence it is not a good idea to buy after 8-9 bars as market cannot continue its upward march indefinately.

After say 5 bars in the OB region market comes out of it, we consider it as a correction only if it does not go into oversold region.Because if our assumption is that market is excessively bullish, it should make a shallow 2-3 bars correction and go to the new top. Instead if it takes a very deep correction and goes into an opposite oversold zone, then the bullish assumption gets nullified.

I have tried to give the thought behind all the actions ...hope it helps in understanding the OB/OS phenomenon correctly.

Smart_trade

 

[murthyavr]

Thanks ST. It's clear now.

I was confused between correction and reversal. As usual, you have explained it all in great detail..

Thanks a lot.

 

[krish4166]

ST,
Today my long entry saved by filter , 2:00 pm bar + F on 5min NF .
thanx: