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Weltrade Forex Indicator Stochastic (Stochastic). The signals and recommendations
Stochastic Forex indicator (Stochastic).
The signals and recommendations
The most famous forex Stochastic indicator is indikatorm (Stochastic). With this the Tools that can accurately determine the maximum and oversold and overbought.
Indicator Stochastic (Stochastic) video guide
Probably, many have been situations in which the opening of the transaction moves to the other side, bumping into the stop loss and the market then still going in the right direction. Seeing this, a trader opens a transaction, but it turns out that later, what was needed: the market again moves against, and again have to touch Stop-Loss.
In such a situation often get new traders, because they do not have experience in the use of important and useful tools. For example, such as the Stochastic indicator to filter out the noise and the negative transaction, affecting the trade.
Let's try to sort out all the details with the workings of the Stochastic and understand how properly to use in trading its advantages.
At the Stochastic indicator has 2 moving averages. First - this is the main line, and the second - signal.
When the main crosses the signal line - signal is generated to enter the market. Only it is important to take into account another factor: if it crosses the signal from the bottom up, it is a buy signal. If the intersection occurs in the opposite direction, that is, from top to bottom, then it is - a signal to sell. Thus, the trader has to be guided exactly where and how the signals are generated to effectively use them.
With the algorithm producing stochastic signals we understand. Now, one more important detail.
It should be understood that the indicator has its two levels: 80% and 20%. Experienced traders to manually add another level of 50%: it is necessary to divide by 2 additional zones indicator: at the top is the overbought zone, and below - oversold.
Get the best sell signal in overbought area - easy. But to get a good stochastics sell signal requires certain conditions. So, it is necessary for it to be in the zone above 80%, because it is an opportunity to enter the market at an early stage of formation tendencies. Diametrically opposed conditions for receiving the indicator signal for the purchase: it is necessary to "catch" oversold below 50% in order to enter the market at the beginning of a trend.
The most interesting variant - carry input signal of the purchase area below 20%. There is formed an important "conservative" signal, which provides traders with the opportunity to enter the market with an upward movement in the beginning of the trend to buy.
Among other things, the trader can determine for itself optimally suited for the analysis of the time slots market dynamics. For example, the stochastic is used to analyze is a daily chart, a four-hour, on which you can evaluate the potential of the daily trend movement.
However, to use this indicator to determine the entry point for a short period (1 hour, 20 or 10 minutes) is not necessary - they will be incorrect.
As you can see, there are a large number of Forex strategies that indicators are used. For the formation of their own profitable strategy, you first need to study available, try different indicators.