How to trade with an oscillator

[Smart_trade]

Re: How to trade with an oscillator
Quote:
Originally Posted by Smart_trade View Post
From your chart also, the oscillator did not go in the overbought zone ie band above 80. The qualifiers come later. First the oscillator needs to go above 80....so no sell signal there.

Smart_trade
Once Stochastics goes into OB zone, its effect of yesterdays and todays OS zone more than 5 candles gets nullified.

In my chart till the last candle the oscillator has still not gone into OB region...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
03:45 PM 6th june 2011
ST,
http://imgur.com/pkhNN
I am Confused on two of your above statements . plz clear my confusion.
Thanks for your time and patience in answering my queries.

The above two statements are two independent statements.

The pre-requisite to get a sell signal is that the Oscillator should first of all go to OB region. Similarly, the pre-requisite to get a buy signal is that the Oscillator should go to OS region in the first place. After that only, you please check for the other conditions - whether they are satisfied or not.

The above pertains to normal buy/sell signals....

Whenever oscillator stays in OB/OS zone for 5 bars and above, it shows excessive OB/OS condition and this excessive pressure needs to be dissipated. So the oscillator come out of the OB/OS zone for a few bars and goes in OB/OS zones or nearabouts once again. (Here we may observe divergence on the chart.) But in the process of this dissipation of excessive buying/selling pressure, if the oscillator goes in the opposite side zone ( suppose it is excessive OB and id goes to a oversold zone) then the effect of that excessive OB/OS excessive pressure gets nullified.

I hope both the statements are clear now.

Smart_trade

 

[krish4166]

ST,
today on 5min 10:40 bar got into OS region means OB pressure got nullified, is it correct way to understand.
only %k line got into oversold region, is it %d line also be below oversold region to get OB pressure to be nullified. plz expln

 

[krish4166]

ST,
On today's trading on 5 min NF 9:45 and 11:25 bar can see divergences and today is good example on your strategy

 

[krish4166]

ST
today 2nd time osc stood in OB for more than 5 bars and now if osc comes out of OB region and gives buy signal based on osc in neutral zone, can we buy.

 

[Smart_trade]

Today was a strong trending day right from the beginning.....use trend following methods on such days...add and trail your stops to successively higher support levels which the market was making today.

Smart_trade

 

[krish4166]

Whenever oscillator stays in OB/OS zone for 5 bars and above, it shows excessive OB/OS condition and this excessive pressure needs to be dissipated. So the oscillator come out of the OB/OS zone for a few bars and goes in OB/OS zones or nearabouts once again. (Here we may observe divergence on the chart.) But in the process of this dissipation of excessive buying/selling pressure, if the oscillator goes in the opposite side zone ( suppose it is excessive OB and id goes to a oversold zone) then the effect of that excessive OB/OS excessive pressure gets nullified.

I hope both the statements are clear now.

Smart_trade
__________________
While amateurs go broke by taking large losses,professionals go broke by taking small profits...... William Eckhardt in New Market Wizards
ST,
Today on 5min TF NF 9:55 to 10;20 OSC was in OS and again between 10:45 TO 11:10 OSC was in OS and at 11:25 bar OSC entered into OB then the effect of excessive OS excessive pressure got nullified. Is it correctly understood.

 

[balasoft80]

Hello ST,
I am going through this thread again and again to understand better. But I have got small question here... i.e. to avoid false moves, you said that we have to see volume. which means that we should the high voulme while reversing? I am not much clear this one... Also could you please post one 5 minute that gives long entry and 30 minute in which there is no buy signal. confused bit with interpretation

http://www.traderji.com/day-trading/30182-how-trade-oscillator-10.html

Please reply this if ur time permits...thanks
Bala

 

[krish4166]

ST,
Gr8 thanks to you:clap:
http://imgur.com/eqgP8

 

[krish4166]

ST,

When I trade with small quantity I am comfortable.
When I try to trade with little more than usual quantity I tend to make mistakes.
Plz answer at your free time.

 

[girishhu1]

hi,
i m enclosing a chart of banknifty 1 hr tf. rsi and stochastics are showing opposite divergences. how to trade?
ps:-daily tf- banknifty is in ob zone for last 8 days on stoch. whereas rsi 14 is in ob for 1 day and showing negative divergence although candles involved are 3 only.
regards,
girish