We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • Lessons from Bretton Woods are forgotten, the US-China #tradewar represents a true existential threat to the post-World War II international trade order, and in turn, the globalized economy that has grown out of the ashes of history. More from @CVecchioFX :https://t.co/paaBxX6Xt0 https://t.co/tcjkQnaBWl
  • What are the truths and myths of #forex trading? Find out from @DailyFX analysts here: https://t.co/uF75VPzstr #FOMOintrading https://t.co/bDXG2dV3wG
  • The US Dollar technical outlook against the Euro, British Pound, Australian Dollar and New Zealand Dollar are discussed. Large wicks left signs of indecision, will reversals follow? $EURUSD $GBPUSD $AUDUSD $NZDUSD - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/12/15/US-Dollar-Technical-Outlook-EURUSD-GBPUSD-AUDUSD-NZDUSD.html?CHID=9&QPID=917702 https://t.co/dpuIppxo3F
  • What are some trading mistakes @nickcawley1 made during his career and what did he learn from them? Find out: https://t.co/y3cckNW22W https://t.co/vUQyVl6b0e
  • Growth linked currencies have gained as investors hope for progress on the trade front as well as stimulus from the Fed. The global economy however remains depressed and seems likely to remain so. Get your market update from @DavidCottleFX here: https://t.co/jt1HH9AHLM https://t.co/Yz65AMJYlm
  • RT @YuanTalks: #China temporarily suspend additional tariffs of either 10% or 5% on some #US goods scheduled to take effect on Dec 15, said…
  • The gold-silver ratio is simple. It is the number of silver ounces you would need to trade to receive one ounce of #gold at current market prices. Find out how you can use this in your trading strategy here:https://t.co/kh5DZvv5ib $XAUUSD https://t.co/eJGODpfTNc
  • How can traders avoid #FOMO in trading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 https://t.co/DoVBd1l1oO
  • #Silver is a precious metal commodity that investors use as an inflation hedge and safe-haven asset. Find out what are some strategies and tips to trade silver here: https://t.co/k4tVcFuwxW #CommoditieswithDailyFX https://t.co/zXCSmH2HLX
  • Markets are trying to maintain a bullish tilt as a new week rolls around, a look ahead at the charts of the #Dow, #DAX, and #FTSE. Get your technical analysis on major world indices from @PaulRobinsonFX here: https://t.co/bYjRDvQsdM https://t.co/mbg0rUbv3K
Stochastic Crossovers

Stochastic Crossovers

2011-09-28 20:38:00
Richard Krivo, Trading Instructor
Share:

When using Slow Stochastics in a downtrend, the optimum sell signal given by the indicator occurs when the two moving averages comprising the indicator have been above 80 and then move below 80.

Stochatic_Crossovers_body_SSD_sell.png, Stochastic Crossovers

When using Slow Stochastics in an uptrend, the optimum buy signal given by the indicator occurs when the two moving averages comprising the indicator have been below 20 and then move above 20.

Stochatic_Crossovers_body_ssd_buy.png, Stochastic Crossovers

Since the above signals are the optimum signals, not as much attention is paid to crossovers that occur between the levels of 20 and 80. How should a trader react to those?

While “mid-level” crossovers are valid technical trading signals, in my opinion, they do not offer as much “pip potential” as do crossovers occurring at the 80/20 levels.

Stochatic_Crossovers_body_SSD_midlevel_sell.png, Stochastic Crossovers

Allow me to create an analogy…

Think of the lines (moving averages) that comprise Slow Stochastics as a string on a bow that is used to shoot an arrow. The farther that the bowstring is pulled back, the more power it has behind it and the farther the arrow will go. With this in mind, look at the Optimum Sell Signal on the chart above and compare it to the Mid-Level Crossover. The crossover that takes place above 80 will have more downside momentum associated with it than will the mid-level crossover that takes place between 20 and 80. The bowstring is not pulled back nearly as far.

While both are valid signals to short the pair, the signal with the most pip potential behind it is the one that has the greater amount of momentum. In this case the pullback to above the 80 level would present trade with the greater pip potential. While this is not an absolute and will not prove to be true each and every time the condition presents itself, it does present a “trading edge” that I believe is worth taking.

For the above reason, I do not take mid-level crossovers as entry signals in my own trading. Rather, I exercise patience and discipline and wait for the higher probability signal to set up.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.