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stochastic perfect buy and sell analyzer tool

March 24, 2015 2:11 pm

Stochastics indicator is used for technical analysis to get perfect forex trading signals and now we learn about how to use and get perfect profitable trades with low risk involvement. Stockastics indicator is a member of oscillator indicators and Mr. George Lane developed it to getting noticed about daily high and low range like when market move as per their daily high level then move the near possible range of low level and the same when move low level.

stockastics-indicator-signals

stockastics-indicator-signals

Technical Level of Stockastics Indicator:

Simply Stockastics indicator values fluctuate between 0 to 100 levels. The indicator typically has two default levels to determine the condition of oversold and overbought as default levels 30 for oversold condition and 70 for overbought condition. Any trader if want to change levels as per their requirement the simple change the levels from indicator setting.

Rules for Buy and Sell

Mostly our observations are that if market move maximum downward then upward retreatment expected, but how to guess about maximum moved condition, so we are now used this indicator. Simple when the blue signal line will touch or break red line at level 30 that is oversold condition in this case we open buy positive. If the blue signal line will touch or break red line at level 70 that is overbought condition in this case we open sell position.

Stochastics Indicator Formula

  1. Stochastics consist of two lines formed by “%K” and “%D”;
  2. Choose a period “N” for “%K”, “X” for %D (Standard settings = 9,3);
  3. %K = 100 * (CCL – LN)/(HN – LN) where CCL = Current Closing Price, LN = lowest low of past “N” periods, HN = highest high of past “N” periods;
  4. %D = 100 * (HX /LX) where HX = X-period sum of (CCL – LN), LX = X-period sum of (HN – LN).
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