Easy trading with Stochastic

One of the indicators of the MT4 default is stochastic oscillator lines. These indicators can help us in determining the open positions, based on overbought and oversold areas. Been oversold area under level 20, while the overbought area is in the range above level 80.

We can utilize the crossing between% K% D as a guide to determine the entry Sell or Buy. The line% K on stochastic symbolized with blue stripes, while the line% D is represented by the dotted line in red. The second line intersecting it contained on the overbought or oversold area can be used as entry points, either sell or buy.

In MT4 indicator stochastic already gives a parameter by default with 5, 3, 3. We can setup according to the tastes of each of us. It all depends on the situation and conditions as well as our understanding of the market.

As for the exact time frame are relative, however  typically traders use TF 1 H in understanding the market price movements. You can use the TF that suits Your habits and understanding.

Following the appearance of the indicator stochastic default MT4:

Then, how do I open positions using the stochastic indicator?

Note the picture below:

Open to Buy

If the stochastic is under 20 level, then going on a cross between a% K% D, when the red line crossing to the blue line from below to above is at the oversold area.

Open to Sell

If the stochastic is above level 80, then going on a cross between a% K% D, i.e. the line flush cut (intersects) with the blue line from above to below is in the overbought area.

But keep in mind, that not all the cross between the red line with the blue line produce a signal. We need to be more careful in determining the appropriate order for the CO-OP. Usually if the State sideways then the stochastic is suitable to determine OP buy or sell. Whereas if the circumstances are currently trending then the thing to note is the trend. If the trend tends to rise (bullish) then wait for the right moment when the stochastic is in the oversold area then we immediately OP Buy. If the trend tends to come down (bearish) then wait for the right moment when the stochastic is in the overbought area then we immediately OP Sell.

Because if we are wrong in understanding the direction of the trend, it will happen along floating.

The stochastic indicator can also be used to determine the divergence and convergence

If candlestic has decreased, while stochastic ascending and it is thus said to be a bullish divergence.

If the candlestick increase, but the stochastic thus decreasing then it is said to be a bearish convergence.

We can benefit from the moment the divergence or convergence in determining open positions. So, do not rely solely on a cross between a% K% D.

Remember, the only indicator as a tool to determine the market price movements. It all depends on the patience and carefulness each one of us.

Maybe useful.