Stochastic - page 8

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Something Interesting

Sergey Golubev, 2016.03.28 14:13

This is very good EA for newbies - for the traders who are learning Stochastic indicator about how it works. EA is trading on overbought/oversold levels of Stochastic indicator with the following parameters which were coded to be inside this EA:

• the parameters of Stochastic indicator which were coded inside this EA: 5/3/3
• overbought/oversold levels to be coded in EA: 80/20

ea_Stochastic_system - expert for MetaTrader 4

• "Advisor analyzes the readings of the indicator Stochastic has, signal for buying is the intersection of the main and signal indicator lines in the oversold zone, a signal for the intersection of sales is the main indicator and signal lines in the overbought zone."

The coder proposed set file for this EA so we may use this EA on EURUSD M15 timeframe according to this set file/parameters.

I backtested EA just to see how it works - please find backtesting results and some charts with the ideas about overbought/oversold levels:

[Seyedmajid Masharian]

Sergey Golubev:

I decided to make some indicators' review based on trading experience and using them inside manual trading systems. So, please find the first thread about Stochastic Oscillator.

Feel free to add or write any comments concerning this indicator about how to use it inside trading systes, how to trade using this indicator and so on.

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Sto.chas.tic (sto kas'tik) adj. 2. Math. designating a process having an infinite progression of jointly distributed random variables.

--- Webster's New World Dictionary

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Stochastic is default/standard indicator in Metatrader 5 and it is located right here (look at the image):

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From Achelis "Technical Analysis from A to Z" :

Interpretation

The Stochastic Oscillator is displayed as two lines. The main line is called "%K." The second line, called "%D," is a moving average of %K. The %K line is usually displayed as a solid line and the %D line is usually displayed as a dotted line.

There are several ways to interpret a Stochastic Oscillator. Three popular methods include:

1. Buy when the Oscillator (either %K or %D) falls below a specific level (e.g., 20) and then rises above that level. Sell when the Oscillator rises above a specific level (e.g., 80) and then falls below that level.

2. Buy when the %K line rises above the %D line and sell when the %K line falls below the %D line.

   Look for divergences. For example, where prices are making a series of new highs and the Stochastic Oscillator is failing to surpass its previous highs.

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More detailed explanation about this indicator we can see from this small article (from MT5 documentation/help file): Stochastic Oscillator

And full description about this indicator concerning trading signals - read this very small article: Signals of the Oscillator Stochastic

stochastic does not work in trending markets

[Sergey Golubev]

Double smoothed stochastic Blau - indicator for MetaTrader 5

This version can easily be tracked down. It was originally published in an TASC article : "Double-Smoothed Stochastic" by William Blau and was published way back in 1990.

[Sergey Golubev]

Double smoothed stochastic of ratio - indicator for MetaTrader 5 

Unlike the double smoothed stochastic itself (that was originally published here : Double Smoothed Stochastic), the "ratio" part of this version can be traced back to Walter Bressert - he uses it as an oscillator, but since that way of calculating (ema(short)/ema(long)) is known for long time before that, only the ratio is added to the indicator name.

[Sergey Golubev]

Double smoothed stochastic - indicator for MetaTrader 5

When it comes to double smoothed stochastic, there seems to be a lot of confusion there. Quite a few versions, and some people claiming to be inventors of it - some with and some without any traceable proof of being actually the inventors. In order to make a bit of order in the whole thing, few versions will be psted.

[Sergey Golubev]

Market Change Cycles MT5 - indicator for MetaTrader 5

Market Change Cycles - an enhanced version of the Stochastic Oscillator, which calculates the position of Close not only in relation to MaxHigh and MinLow, but also displays the difference between them from the opening price, which allows you to take market volatility into account when creating a strategy.

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Version for MT4 - https://www.mql5.com/en/code/25992

[Sergey Golubev]

Stochastic Time Control - indicator for MetaTrader 5

Indicator based on iStochastic (Stochastic Oscillator).

Additional features added:

• setting two levels (" Value Level Down " and " Value Level Up ") - these settings are recommended to be used when accessing the indicator from the EA and for debugging in visual mode - so that the indicator levels that are set are visually visible.
• setting the time period in which indicator data is displayed

• Use time control - use time period
• the time interval is set as " Start Hour ": " Start Minute " - " End Hour ": " End Minute "

[Sergey Golubev]

• Stochastic MACD - indicator for MetaTrader 5
• Stochastic MACD - indicator for MetaTrader 4 

In “The Stochastic MACD Oscillator” of November 2019 issue of TASC, author Vitali Apirine introduces a new indicator created by combining the stochastic oscillator and the MACD. He describes the new indicator as a momentum oscillator and explains that it allows the trader to define overbought and oversold levels similar to the classic stochastic but based on the MACD.

[Sergey Golubev]

iStochastic Increase Position Volume - expert for MetaTrader 5

Trading strategy idea

Trading by the iStochastic indicator (Stochastic Oscillator, STO). Checking the idea: is it possible to trade on the signal "intersection of the main and signal lines" without taking into account the indicator levels. In this case, it is possible to increase the position, but with the opposite signal, the positions will be closed. The EA does not have Stop Loss, Take Profit and Trailing.

[Sergey Golubev]

Stochastic Intersection Arrow - indicator for MetaTrader 5

The figure below shows the ' Stochastic Intersection Arrow ' indicator (displays arrow objects) and the standard iStochastic indicator (Stochastic Oscillator, STO). Please note that the standard iStochastic indicator is shown only to explain how the custom indicator ' Stochastic Intersection Arrow ' works - the standard iStochastic indicator is not displayed during operation .

Forum on trading, automated trading systems and testing trading strategies

Stochastic

Sergey Golubev, 2013.06.03 10:38

This is the real example about valid signal based on Stochastic, and some movement which is related to news event for now. We will come back to this image later but I think - it is good example about the following "news events are not our friends" :)

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2018.10.17 18:10

Stochastic Oscillator in Trading (based on the article)

• "The stochastic oscillator measures the closing price of a candlestick against the average closing price of a certain amount of candlesticks before it. For example, it shows whether this candlestick is overbought or oversold as far as the overall range of the market is concerned. This momentum indicator is not to be used in a trending market, but rather a market that has been going sideways. While there are strategies that use them with trends, that is less normal than looking at this as an opportunity to confirm or ignore support or resistance."
• "The stochastic oscillator is shown in a window at the bottom of the chart, separate from price. It has two lines which act like moving averages, the crisscross the panel. The standard situation is to see the 20 and the 80 level marked as both the overbought and oversold condition."
• "Occasionally the indicator will crisscross the lines above the 80, which of course is the overbought condition, or below the 20, which is the oversold condition. This is how most people will use stochastic oscillators, as a sign that perhaps it’s time to buy and sell based upon a resumption of what we seen over the last several candles. However, in a trend this reliability tends to disappear. It is because of this that you will often see stochastics offer more reliability when you include support and resistance."
• "Sometimes, people will use the stochastic oscillator for finding divergence. Divergence is when the momentum of an asset isn’t matching the price. For example, we could be seeing “lower highs” in the stochastic oscillator, but “higher highs” in the price window. This shows that perhaps the underlying momentum is starting to slow down. Looking at the chart below, you can see that the Euro has been rallying against the Polish zloty over the last several candlesticks, but at the same time the “highs” in the stochastic oscillator are getting lower. This suggests that perhaps the momentum is slowing down and it could lead to a selloff. This isn’t reason enough to start shorting the market, but it does give you a bit of a “heads up” as to what could happen."

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Stochastic

The beginning 

1. Stochastic Oscillator, the beginning

After 

1. Stochastic thread. 
2. How to Trade Stochastics Like the Pro's Do - video 
3. The Difference Between the Fast, Slow and Full Stochastic - video
4. Stochastic Trader thread 
5. Multi pair indicators thread
   (Multi pair MACD, Multi pair CoeffOfLine, Multi pair RSi, Multi pair Stochastic, Multi pair WPR (Williams % range), Multi pair Laguerre RSI, Multi pair Wilders DMI, Multi pair dss, and more)
6. Stochastic RSI for MT5 - the post 
7. Stochastic rsi (oma) colored or MT5 - the post:
   - RSI types: Cuttler's RSI; Ehlers' smoothed RSI; Harris' RSI; Rapid RSI; RSI; RSX; Slow RSI
   - levels: floating; quantile; fixed
8. Round price DOC indicator for MT5 - the post: Added 2 parameters : price (so we can chose the price we would like to use - in the original it is Close) and T3Original (false for Fulks/Matulich calculation which is faster then the original Tim Tillson calculation).