Stochastic Oscillator consists of two lines called the% K and% D. The
core of this indicator is% K itself while the% D is the HIGH SCHOOL of%
K. It could be said that the%d line is as identifying the direction% K. If we look at the range of Stochastic Oscillator i.e. 0 – 100, it
can be said that this indicator is not actually different from the RSI.
It's just in a Stochastic calculation includes lowest prices, highest
and closing price at a specified time.
Now how this indicator uses? Do the same with RSI? If the same why not
use RSI? Well this question we will answer in class this time.
Views of its kind, is indeed the same as the Stochastic RSI indicator
i.e. type Oscillator. The indicator uses the average of this model to
accommodate the movement of saturated buy and sell of currency
movements. But there are some things that are not owned by the RSI but
owned Stochastic and likewise vice versa.
Review of
sensitivitasnya, RSI is far more sensitive than Stochastic. So is the
ease of reading. RSI has no smoother as%d on Stochastic. Thus can
eliminate the effects of bias on
readings. However, the
simplicity of the RSI can also be a drawback. RSI less fit if worn to
know the ongoing trend on the currency. While the combined% K and% D on
Stochastic can be a pretty powerful duet in predicting the trend is
going on.
The other thing is not sesensitif due to Stochastic
RSI then the false signal was not as often as on the RSI. This is why
most traders prefer Stochasic in knowing the State of saturation of
market buying and selling
. There is some information that we
can get with a Stochastic Oscillator. But in general it is no different
with information on RSI and high school. Stochastic Oscillator and it is
actually a combination of both types of these indicators by means of
different calculations. Overall, these indicators we can use to
determine overbought/oversold State (meaning that the prediction of the
trend for the long term), the intersection between the% K and% D (as a
short term trend), and Bullish/Bearish centerline.
Overbought/Oversold/overbought State
Overbought/oversold state this will trigger the ups and downs of prices in the long term. If the price increase is occurring but the stochastic overbought point already-nyadan started to leave the area, that means the pressure will occur at a rate of price increases which in not making the price back down to a new balance.
% K and% D Crossing
in addition to the 20/80 area as in the example above, the intersection of% K and% D also can we use to determine a position Buy/Sell. There are times when we ran out of patience waiting for Stochastic limit touching 20/80 as we have specified. Although often accurate but in a wave motion is not necessarily when Stochastic moving down then he got around to entering the area 20 and likewise when he rides. Sometimes before it got past the area prices have again moving towards the reverse so that we lose the opportunity. Well, crossing the ala Sotchastic we can use as a determinant of Buy/Sell in the circumstances of this
. Just as the Moving Average indicator is used by looking at the crossing at two different periods, the same thing also can we apply Stochastic. The difference here is crossing that happened was between% K% D which is smoother than the% k.
As we know previously% D of% K MA is that no other reflection of price changes. So, in keeping with the nature of the MA in determining the change in trend, every intersection between%d with% K means is a change in the trend for a brief period in the future. A Bullish condition occurs when a line is%%d K cut from below and otherwise Bearish trend is obtained when the% K cut from the top. This State can only take place even when the two lines are in the overbought/oversold. If this happens, it means buying or selling pressure is indeed being strong so it will happen likely prices break through the boundaries of support and his ressistance.
Well, until the discussion here about the Stochastic Oscillator. Before we move on to other indicators, need I remind them again about the subject indicator character like Stochastic oscillator. The advantages at the same time a lack of indicators that move in a specified range like this is sensitivitasnya. So also in the Stochastic can be very sensitive when we use a period of
. The use of inappropriate period can take us in the wrong decision-making ultimately leads us on a great loss. For it is highly recommended You seek the best periods on these indicators for each of the pairs. Magnitude can vary. Increasingly long periods which are used then the indicator will be increasingly refined which means to-sensitivity – its skill will be reduced. It is advisable also to use Full Stochastic in usage because it is more delicate and can reduce the indicator that is too curly.
Analysis with Stochastic Oscillator lines
is a Stochastic Oscillator lines indicator for measuring the saturation of the market. However, when compared to the RSI, stochastic has advantages i.e. buy and sell signals have.
The market is said to be overbought when stochastick value above 80, and is said to be oversold if market value below 20.
Overbought condition, we can prepare-sip takes a position open buy, because the market will reverse direction is down. Oversold conditions and we can get ready to take a position open sell, because the market will reverse direction up.
There are two strategies that can be shared by using stochastic. IE:
1. Buy sell bottom top Strategy
I.e. open a position when the market in conditions of saturated intersection occurs and stochastick.
Entry point Open buy is when the stochastic is under 20 and value line signal cut main line from above, so that the next line signal will be under the main line
. While the entry point to the Open Sell is when the stochastic value above 80 and signal line cuts the main line from the bottom, so that the next line signal will be above the main line.
2. Convergent strategy
Indicator stochastic can also experience the converging and diverging, therefore in the event of convergent or divergent we could use it as a time to enter the market.
Entry point open buy happening is when the graph is the more humble while stochasticknya rises, plus the presence of a signal line cuts the main line from the top.
To open a sell entry point, is when the graph of rising while his lowly stochastic, plus signal line cuts the main line from the bottom.
