Daytrading with the best Stochastic Trading Strategy. Day trading with the best Stochastic Trading Strategy best binary trading strategy the name of the strategy we’ll discuss today. As the name suggests, this is a stochastic strategy suitable for day traders.
The stochastic strategy is much the same as the Day Trading Price Action- Simple Price Action Strategy, but the only notable difference is that this time around, we incorporate into our strategy a technical indicator, namely the stochastic indicator. This can turn you into a modern sniper elite trader because the Stochastic indicator will only make you pull the trigger at the right time. A modern sniper elite trader only pulls the trigger on a trade when he is certain that he can pull a winning trade. We at Trading Strategy Guides. Forex trading strategies that can really help turn your trading around.
If you’re a day trader, this is the perfect strategy for you. The stochastic strategy evolved into being one of the best stochastic strategies because, despite the stochastic indicator being a very popular indicator among traders, they have been using it the wrong way. Day trading might not be your thing, but perhaps you’re interested in trading on the higher time frames, like the daily chart. The stochastic indicator was developed by George Lane more than 50 years ago. The Stochastic indicator is a momentum indicator that shows you how strong or weak the current trend is. It helps you identify overbought and oversold market conditions within a trend. The stochastic indicator should be easily located on most trading platforms.
After extensive research and backtesting, we’ve found that the stochastic indicator is more suitable for day trading while indicator like the MACD is more suitable for swing trading. Another reputable oscillator is the RSI indicator which is similar to the Stochastic indicator, but we chose it over the RSI indicator because the Stochastic indicator puts more weight on the closing price which by the way is the most important price no matter what market you trade. Let me just quickly tell you how to use the stochastic indicator and how to interpret the information given by this amazing indicator so you can know what you’re trading. 20 line, we’re in oversold territory. Please have a look at the chart example below to see how to use stochastic indicator.
So, how does the stochastic indicator work? The mathematical formula behind the Stochastic indicator works on the assumption that the closing prices are more important in predicting oversold and overbought conditions in the market. Based on this assumption the Stochastic indicator works to give you the best trade signals you can possibly find. What about the stochastic indicator setting?
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules. We’re daytrading, but having in mind the higher time frame sentiment and trend. This is a crucial part of the strategy because we only want to be trading in the direction of the higher time frame trend. The multiple time frame concept is important because it can give you a more robust reading of the current price action and more it can help you better time your entry and exit points. On the daily chart, it’s not necessarily for the stochastic moving averages to be below the 20 level. They can be moving away from the oversold territory and the signal can still be valid, but it shouldn’t be above 50 level.