Good point John I notice that the best signals I got were after 10:00 AM news I waited for the dust to settle and take the other side. I pull the charts only to see market opening time frame from 9:30 to 4:16 As you mentioned about cycles, will be advisable to see what the price has been doing pre-market to be aware of those cycles?
It does seem to be a civilized thread does'nt it. It must be killing some of us. Oddly enough, IMO, the opening of the morning session is pretty much pure momentum most days and this is where stoch comes into it's own. I must confess that most days I bang off two quick contrarian trades on the ES for a tick target only. Nothing clever in the way of trade size as it is a dangerous time of day, because of speed. But it makes me feel good and opens my mind to the market for the morning which is all I trade.
if you want to backtest more months get a free trial of sierra-charts and download historical data from opentick.com for free and you can test all you want for fourteen days ...
it's still not too clear to me where you get out (target/stop). Could you post a chart, like they say: a picture tells a thousand words.
Best sto trades are on days where there is no news. Use the 24 hour data with tick or volume bars. Not really important which or what setting. A lot of times on newsless days there will be a trade around 9.45 or so and another around 10.15. let the stoc show the cycle. Let it run smoothly up and down. Market has to ebb and flow without news. John
sure here it is I am using 1:1 risk reward on YM 20/20 20 - stop-loss 20 profit target remember I am not an expert This is just a test.
I've tried plain stochastics with little success. I've found StochRSI to work much better, especially in the morning when the trends are clean. Does anybody use StockRSI? The only thing I wish I had was another good indicator I can compare it against to tell me if a stock is going to remain overbot/oversold. lux
Hello luxor, RSI is a price derivative and the stoch is a derivative of the RSI when used as a stochRSI. You are getting a long way back from the coalface. To be frank, it is probably more in the manner that they are applied. You can only extract so much highlight from either stoch or stochRSI, or from any indicator for that matter. One thought might be to skew the 100/0 scale in line with trend. ie If the price is bouncing within it's channel without new highs or lows then the midpoint of 50 is probably OK. If the trend is up, then you may consider a midpoint of say 60 or more. Depending upon your software, you could write some simple code and see how it all fairs out.
Very astute observations. Stochastics loses some of its magic when you realize it is merely measuring where the close of the last bar is compared to the range of the lookback period. It was originally derived by George Lane and some researchers doing hand calculations on grain prices. http://www.lanestochastics.com/ They noticed that when markets closed at extreme highs or lows, they often were O/B or O/S, as the price action represented weak holders getting shaken out at the close. Unless that is, the market was trending, in which case the signal would be false. That lead to the concept of divergence, which is still the most powerful signal in technical analysis. At its most basic, a divergence indicates that the prevailing trend is losing steam, as price is unable to close at an extreme.
got it Thanks for the tip Sierra charts are good for the money in my opinion I'll do the backtesting just for curiosity but I believe is all in your ability and interpretation and knowing what an indicator does and it's limitations what's important