Trading with Stochastic indicator involves the following signals: *Remember: Price Action Moves Before Momentum Changes!!!
Stochastic lines cross — indicates trend change.
Stochastic readings above 80 level — currency pair is overbought,
Stochastic staying above 80 level — uptrend is running strong.
Stochastic exiting 80 level downwards — expect a correction down or beginning of a downtrend.
Same for readings below 20 level — currency pair is oversold, staying below 20 — downtrend is running strong,
exiting upwards above 20 — expect an upward correction or a beginning of an uptrend.
There are also so called "trigger levels" that are added to the Stochastic chart at 20 and 80 levels. Those lines suggest when the market is oversold or overbought once Stochastic lines pass over them. You can only trade oversold and/or overbought areas OR use demand/supply zones to trade more. Price Action does not ALWAYS need to hit 20 or below or 80 or higher for you to trade, might be in a trend or at a fib ret golden level (50%-61.8%) reversal area.
Strategy 1. Trading Stochastic lines crossover
The simplest and common method of reading signals from Stochastic lines as they cross each other. Stochastic %K and %D line work similar to moving averages and:when %K line from above crosses %D line downwards traders open Sell orders. when %K line from below crosses %D line upwards traders open Buy orders.
Strategy 2. Trading Stochastic oversold/overbought zones
Stochastic by default has 80% level, above which market is treated as overbought, and 20% level, below which market is considered oversold.
Strategy 3. Trading Stochastic divergence
Traders are looking for a divergence between Stochastic and the price itself.
NOTE: You can change the numbers on Stochastic Indicator to whatever you prefer, but for scalping and/or day trading I like 5,3,3 (more sensitive)
Stochastic lines cross — indicates trend change.
Stochastic readings above 80 level — currency pair is overbought,
Stochastic staying above 80 level — uptrend is running strong.
Stochastic exiting 80 level downwards — expect a correction down or beginning of a downtrend.
Same for readings below 20 level — currency pair is oversold, staying below 20 — downtrend is running strong,
exiting upwards above 20 — expect an upward correction or a beginning of an uptrend.
There are also so called "trigger levels" that are added to the Stochastic chart at 20 and 80 levels. Those lines suggest when the market is oversold or overbought once Stochastic lines pass over them. You can only trade oversold and/or overbought areas OR use demand/supply zones to trade more. Price Action does not ALWAYS need to hit 20 or below or 80 or higher for you to trade, might be in a trend or at a fib ret golden level (50%-61.8%) reversal area.
Strategy 1. Trading Stochastic lines crossover
The simplest and common method of reading signals from Stochastic lines as they cross each other. Stochastic %K and %D line work similar to moving averages and:when %K line from above crosses %D line downwards traders open Sell orders. when %K line from below crosses %D line upwards traders open Buy orders.
Strategy 2. Trading Stochastic oversold/overbought zones
Stochastic by default has 80% level, above which market is treated as overbought, and 20% level, below which market is considered oversold.
Strategy 3. Trading Stochastic divergence
Traders are looking for a divergence between Stochastic and the price itself.
NOTE: You can change the numbers on Stochastic Indicator to whatever you prefer, but for scalping and/or day trading I like 5,3,3 (more sensitive)