Technical Analysis: Stochastic
There are a number of indicators which can assist you in Forex Trading or help you in judging the market direction or trend, there are basically two types of indicators Leading indicators and Lagging Indicators. Lagging indicators tell you that the Trend has changed and The Forex Trading Market is now moving in the other directions. These indicators keep you behind as you come to know about the trend a bit later and you could have earned more pips if you have entered early in a trade. However they are more fake proof as a short time opposite move will not be able to make them give a wrong signal most of the times. For Example MACD is a lagging indicator. Leading Indicators are those which give you a signal that the on-going Trend is about to change thus, giving you a better opportunity to enter a trade and make more pips as compared to leading indicators. However these are not fake proof as a market move for short time can make them give wrong Signals. It is always good to wait a bit before entering a trade using the leading indicators. In this Article we will talk about a very simple and easy to use Indicator of Forex trading which is called The Stochastic Indicator. It is a leading indicator that means it gives you a signal that the ongoing trend is about to change and the market is going to take an opposite move. It consists of two lines and works on a scale of 0 to 100 and indicates the market’s Oversold and Overbought conditions. First I will tell you what is an Oversold and Overbought mean and how to use them to place your trades: Oversold means that there are no more sellers left or there are a very few of them and now the buyers will come into play and take the price to the other side. When the Stochastic lines are below the 20 level then it is called an oversold position. Hence giving you a signal that it is a Buy time now to make some pips. Overbought is exactly the opposite of the oversold condition i.e. it indicates that the buyers are exhausted and it’s time for sellers to come and take the market their way. When the stochastic lines are above the 80 level that is called an overbought condition which says Sell and take your share of the pips from the move. However at times Price can also show a fake movement making stochastic to give you a wrong Signal because of that and as I already said this this applies for all leading Indicators. The Forex Trading market is completely random and never use a single indicator or even a single type of analysis for your trades, always take a confirmation from the other indicators also. Depending on one indicator can give you some money for a short time but can take away all of that if one move goes against you. So be careful and keep on Making Pips. Forex online Trading by Fidelis Capital Markets https://www.fideliscm.com/