Simple's Green Room

[pennies2007]

Slow Stochastic Method

Here's another way to look at it Qui that may be easier to understand.

The slow stochastic is a nice addition to any trading setup overall. I have it set for 15,5,5. I'm sure there are tons of different settings but I like that particular setup.

During a downtrend, watch for the STO to peak and begin to turn. That's usually a short opportunity.

In this case, the stochastic peaked each time the TDI did. Now the stochastic isn't as good at showing hidden divergence. And the stochastic can max out at top or bottom and just run sideways so don't get the idea that you can just go long or short at tops and bottoms and swing it both ways. That's not the way it works.

It's primarily designed to show exhaustion points on profit taking during uptrends and downtrends. If we're in an uptrend overall, you'd look for opportunities to go long as the stochastic bottomed at the lower level and turned back up. In a downtrend, you want to look for opportunities to sell as the stochastic peaks and begins to turn back down.

Use it only for confirmation of what you see though, not as a stand alone trading indicator.

Same GU hourly chart...