Does anyone know anything that is a better overbought/oversold indicator than stochastics? I have been using them for a while now, and I am sick of them being inaccurate most of the time. When the stock is in an uptrend, they show overbought, yet the stock keeps going up. And vice versa for downtrends. So, I am wondering if anyone knows any other better, more accurate indicators??? I have been using stochastics for the Don Miller strategy, thats just something to keep in mind if you will be answering.
I am not familiar with the don miller strategy, but I am familiar with stochastics. How long have you been using the indicator? What are your buy and sell signals? Are you using a crossover? What platform are you using? Have you done any backtesting?
That in and of itself is telling you something is it not..... That is what led to the creation of the Stochastic Pop. Have you tried changing the numbers and modifying it a bit....moving the overbought and oversold lines to fit YOUR trading. Make 'em pretty, Chris
Indicators were never really meant to be purely buy and sell tools. Most good traders use indicators only as a tool to confirm what they are already seeing in the market that they are watching - uptrends, downtrends, consolidations, range bound action and so on. Another thing, any market is never overbought or oversold. It's value is whatever the market says that it is at any given period of time. Charles
In a Bullish environment stochastics will remain overbought for an extended period, the same goes true in a Bearish environment, remaining oversold. If you desire to use stochastics, you should consider getting a confirming signal from at least 1 other indicator.
Stochastic is a counter-trend indicator. It works as long as one takes postions in the direction of a trend, and uses stops to protect against a trend reversal.
A lot was said about indicators in another thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=16370. As always, you have to sort among the information and weed out the idiots. Also, you might want to look at the TICK; it gives a good perspective of the overbought or oversold condition of the market and usually signals a reversal. Good trading.
First of all, thanks a lot to all the people that have replyed and will reply. Now, I was a little unclear about the way I use them. I do not only use stochastics as my only indicator for entering or exiting a position; I use them as a confirmation with many other things. But, as someone has said here, in an uptrend they remain overbought, and vice versa for downtrends. I find them to be quite useless even as a way of confirmation in a addition to other things I use. Those who know Don Miller's strategy know what I am talking about. I am actually very consistent with my trading, but i was hoping to find something to improve it. I just found this site, so I thought I might consult with other professionals.