✔ Recognise the trend: 👉 In a trendy market only open position in the direction of trend. 👉In a range market you can use both buy and sell signals.
✔ Upper band and lower band indicating different things in different market conditions: 👉In a trendy market upper and lower bands show the momentum in the market for example in an uptrend if the indicator is above 80 it means that buyers have the momentum. 👉In a range market, however upper and lower bands showing the overbought and over-sold areas. So, we may go long if we see oversold in a range market and go short if we see a over-bought situation.
✔ Divergence is another important strategy to adopt when using stochastic indicator as a divergence may indicate a trend reversal.