Swing trading strategy based on the use of ⭕️Stochastic Oscillator⭕️
🧵Things you'll learn
- How stochastic value is calculated
- How to use the indicator
- Swing Trading entry exit rules.
#StockMarket #Trading #Investing
@kuttrapali26 @KommawarSwapnil @caniravkaria
🧵Things you'll learn
- How stochastic value is calculated
- How to use the indicator
- Swing Trading entry exit rules.
#StockMarket #Trading #Investing
@kuttrapali26 @KommawarSwapnil @caniravkaria
What is a Stochastic Oscillator 🤔
- It's a momentum indicator.
- Developed by George C. Lane in the late 1950s.
- It shows the location of the close relative to the high-low range over a set number of periods
- It's a momentum indicator.
- Developed by George C. Lane in the late 1950s.
- It shows the location of the close relative to the high-low range over a set number of periods
How is it calculated?
🟢%K = (Current Close - Lowest Low)/(Highest High - Lowest Low) * 100
i🟢f you use the values in the below image you'll get a Stochastic value close to 50.54
🟢%K = (Current Close - Lowest Low)/(Highest High - Lowest Low) * 100
i🟢f you use the values in the below image you'll get a Stochastic value close to 50.54
How NOT to use Stochastic
🟢Don't just buy because it's oversold
🟢Don't just sell because it's overbought
- in the below image we can see stochastic being OB but the price either fell by a low % or remained flat and sometimes even went up.
🟢Don't just buy because it's oversold
🟢Don't just sell because it's overbought
- in the below image we can see stochastic being OB but the price either fell by a low % or remained flat and sometimes even went up.
How to use Stochastic for a swing trading
Rule 1⃣ Identify stocks above 200 EMA
Rule 2⃣ Stochastic should be OB (above 80) in weekly time frame.
Rule 3⃣ Stochastic should be OS (below 20) in daily time frame.
Rule 1⃣ Identify stocks above 200 EMA
Rule 2⃣ Stochastic should be OB (above 80) in weekly time frame.
Rule 3⃣ Stochastic should be OS (below 20) in daily time frame.
1st two rules getting satisfied
🟢Pro-tip wait for at least 2 to 3 weekly candles for stochastic to remain above 80 or at least above 50
🟢Pro-tip wait for at least 2 to 3 weekly candles for stochastic to remain above 80 or at least above 50
3rd step is to take an entry
- check If 1st two conditions are meet
- Every time stochastic becomes OS on daily time frame look for a potential support zone and take entry
-If stock goes 5% below 50 ema on daily time frame after your purchase then exit i.e (book profit/loss)
- check If 1st two conditions are meet
- Every time stochastic becomes OS on daily time frame look for a potential support zone and take entry
-If stock goes 5% below 50 ema on daily time frame after your purchase then exit i.e (book profit/loss)
😇On the journey to share 100 educational threads.
The goal is to educate people about markets one thread at a time.
Follow👥@AakashSSawant1 for more such content
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The goal is to educate people about markets one thread at a time.
Follow👥@AakashSSawant1 for more such content
Checkout my Twitter timeline for the previous 2⃣1⃣ Strategies/educational content
docs.google.com
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