The Different Ways To Trade The Stochastics
Cryptohopper Newsletter
The market has been very volatile over the past month with Bitcoin crashing 65% to 3,800$. The price has since made an astonishing 80% recovery in one week from March 13th until the 20th. Following the recovery to almost 7,000$; the price has continued to range between 6,900$ and 5,600$. During the crash, many traders have attempted to buy the dip, just to see it dip even lower. Today we will explore how you could mitigate this risk by using stochastics with region crossover.
Without further due, let’s get into how you could have traded this past month by using the normal stochastics and the stochastics with region crossovers.
Different stochastic strategies
There are many different ways to use stochastics. Today we will explore 2 of them, along with their advantages and disadvantages:
Stochastics oversold: This strategy involves getting into a position when the stochastics drop below 20.
This strategy works better when the broader trend is in your favor, as it is expected for the price drops to be shortlived and to continue moving higher. The advantage of this is that you will be getting in at the lower prices in an uptrend.
This strategy can be very dangerous during a market crash though, or when the price is bearish in general as you will be getting in the trade, while the price will continue to drop further. This can be seen very well in the first three trades where the price continued to drop lower even though the stochastics were already oversold.
Stochastics with region crossover: This strategy involves getting into a position once the value of the asset in question rises again above 20.
This strategy can work very well in a downtrend but also in an uptrend depending on the severity of the pullback. In a downtrend, this strategy increases the probability that you are entering the trade only when the momentum is back in your favor. This can be seen by the first three entries in the graph where the buy point was 7%, 8%, and 16% lower than with the oversold strategy
In an uptrend, if the pullback is very large then this strategy will again ensure that the price will not continue[/b its descent once you enter. However, if the pullbacks are not very severe, then you will enter at a worse price point.
Overall the stochastics with region crossovers is more conservative and can lead to higher profits when the markets are volatile, as it is the case right now. Join us at Cryptohopper, where you can automate both of these strategies along with many others!
The market has been very volatile over the past month with Bitcoin crashing 65% to 3,800$. The price has since made an astonishing 80% recovery in one week from March 13th until the 20th. Following the recovery to almost 7,000$; the price has continued to range between 6,900$ and 5,600$. During the crash, many traders have attempted to buy the dip, just to see it dip even lower. Today we will explore how you could mitigate this risk by using stochastics with region crossover.
Without further due, let’s get into how you could have traded this past month by using the normal stochastics and the stochastics with region crossovers.
Different stochastic strategies
There are many different ways to use stochastics. Today we will explore 2 of them, along with their advantages and disadvantages:
Stochastics oversold: This strategy involves getting into a position when the stochastics drop below 20.
This strategy works better when the broader trend is in your favor, as it is expected for the price drops to be shortlived and to continue moving higher. The advantage of this is that you will be getting in at the lower prices in an uptrend.
This strategy can be very dangerous during a market crash though, or when the price is bearish in general as you will be getting in the trade, while the price will continue to drop further. This can be seen very well in the first three trades where the price continued to drop lower even though the stochastics were already oversold.
Stochastics with region crossover: This strategy involves getting into a position once the value of the asset in question rises again above 20.
This strategy can work very well in a downtrend but also in an uptrend depending on the severity of the pullback. In a downtrend, this strategy increases the probability that you are entering the trade only when the momentum is back in your favor. This can be seen by the first three entries in the graph where the buy point was 7%, 8%, and 16% lower than with the oversold strategy
In an uptrend, if the pullback is very large then this strategy will again ensure that the price will not continue[/b its descent once you enter. However, if the pullbacks are not very severe, then you will enter at a worse price point.
Overall the stochastics with region crossovers is more conservative and can lead to higher profits when the markets are volatile, as it is the case right now. Join us at Cryptohopper, where you can automate both of these strategies along with many others!