Stochastic secrets

Stochastic secrets
By RedTrader and contributors, 07‐10‐08

A. Preamble

The purpose of indicators appears to be misunderstood by a certain class of traders.An indicator comes in help to a trader in thenext ways:

1. If we consider the fact that a classic indicator (Stochastic, RSI, Bollinger bands, moving average, ADX etc.) is used by a big percent of the active traders, we can point to the conclusion that all of them, seeing at a certain time a certain signal (or almost the same signal) of the classic indicator they use, will be tended to act in the same way. This is the result of the so called mass psychology. So, an indicator, helps a trader by offering him a tip regarding what the majority sees and, as a result, is tended to do;
2. If the indicator is coupled to a profitable strategy, it’s signal(s) contribute to a much bigger certainty;
3. In some strategies it offers a better price or an advantageous moment for the trade opening.

P.S. Every indicator has it’s limitations.

B. Quotes

• “The losers teach you, the winners feed you.” Titus
• “If for a song, a certain instrument will make the song complete, for a trader, an indicator would ennoble the trading style.” RedTrader
• "Stochastic helps you to <<listen>> to the market. Aiyahmarklah

C. Stochastic settings

sumber : ebook stochastic secret - By RedTrader and contributors, 07‐10‐08