Stochastics and price action

Discussion in 'Technical Analysis' started by feb2865, May 8, 2007.

  1. feb2865


    I've been toying around with Stochs(14,3,3) on 1 minute charts(YM) along price action and I found some sort of consistency. As I don't have access to historical data other than the current June's contract, I would like to know those who has been using this indicator along with price action for some time your experiences in terms of consistency.

    Please don't put out this "I trade only price" thingy or "you're a whimp because you use indicators" crap that is all over this site. As I said before is the stochs WITH price action. Not intended to fuel a stupid debate about indicators to see who has the biggest balls.

    I will appreciate if you try to be specific and stick to the subject.

  2. Cheese


    The Stochastic is a very nice toy to have up on your screen for trading. Like so many things to do with trading you really do need to know how to read and use it as part of your overall methodology.

    For novices, and many others it seems, by inexperienced or misunderstood use of this indicator, you can completely f**k yourself up the butt.
  3. bvam1


    It's a good indicator. You need additional filtering though (i.e. Some other indicators)
  4. With the stoch its really worth understanding the formula and how it gives you the divergence you get.

    This will help you to understand when and why it might be reliable and unreliable.
  5. feb2865


    Thank you guys your response has been helpful

    I completely agree is important to know how it works and what it does and it's limitations. I did my homework already on this particular area.

    I've been amazed on how well you can used along with price action. But again I can't go farther than 2 1/2 months as I have some minor discrepancies with the broker I am using in terms of historical data.

    I've been using a 1 minute charts(mini dow) for a quicker response and so far so good. The only filter I've bee using is price as I believe we should trade price and not indicators. But in this particular case, with the regular setup 14,3,3 on one minute charts gives you a nice "indication". of course if price doesn't move then the signal is invalid.

    I feel that 2 1/2 months of back testing is not enough and I would like to know from people that has been trading with this indicator for a longer period if it has been consistent and robust to be part of a trading system.

    Again, thanks for the quick response guys and to keep the subject in line.
  6. bvam1


    Well, it's not a good indicator by itself. I've backtested it with ES against 5 or 10 years of data (forgot which). No single indicator is good by itself, otherwise, we'd all be rich. The best indicator by itself is, perhaps, the DMI according to the result I got.

    If you're going to backtest, do it with at least 10 different stocks or whatever you're trading to see the consistency of the indicator.
  7. Stochastic actually means random... :D
  8. feb2865


    that's why I am asking as I don't have this data available

    As I said and therefore I agree with you in some extend, no indicator is good by itself. That's why I am testing it on price.

    Any other takers??
  9. bvam1


    Exactly how do you intend to do that? Give us something so we can comment. An example of a trade or whatever? When it comes to price action alone, people may do things differently.

    You don't incorporate volume into your analysis?
  10. feb2865



    well price is price. If the market is not making new high/lows all indicators become useless in my opinion.

    an example of a trade, well I don't know I am toying around with it. I am using 1 minute charts, the stoch comes from oversold/overbought if the price makes new high/low then pull the trigger.

    I am not trading on this. I just went back in time like I said couple of months and it was consistent, yet still doubtful as the time frame is not enough.

    Just want to know if anybody is using it as a part of a system and has been consistent, I got your point, thank you just to see if anybody else has another take, we don't need to overcomplicate things you know, is easy.

    As for volume, I am not a fan of it especially on lower time frames. But I am not here to start a debate as I said before.
    #10     May 8, 2007