Day
Strategies Stochastic
Day
trading strategies for stochastic traders. Each strategy is based on
a top-down trading strategy using the stochastic indicator. First one
identifies a stochastic trading set-up,
then one implements
a multiple times
frame trading
strategy
to enter the trade.
Indeed,
advanced stochastic traders ought to validate the trading set-up
on a higher time frame.
For new traders who are not yet competent in top-down trading system,
that may be a too much ask.
Day
strategy Stochastic
One
-Bullish
Stochastic
Day Trade
Set-up
First
condition:
The
stochastic (8, 3, 3) is oversold on the 2H chart
Second
condition:
The
price initially declined and formed a zigzag pattern, and was at a
key support level on the two-hour chart.
Stochastic Bullish Day Trading
Signal
The
trading signal occurs on the thirty-minute chart when the common
sense
trend line is broken or one isolates
a bullish chart pattern in the vicinity of the support
level.
Stochastic Bullish Day Trading entry
The
entry takes place on the five-minute chart when the price retests the
declining channel after breaking above it or near the support level
that was highlighted on the two-hour chart.
Look for an inverted head and should chart
pattern
or another
reliable bullish chart pattern on the five-minute chart.
Bearish
Stochastic
Day Trade
Set-up
First
condition:
The
stochastic (8, 3, 3) is overbought on the 2H chart.
Second
Condition
The
price initially rose and formed a
zigzag pattern, and now was
at
a key resistance level on the two-hour chart.
Stochastic
Bearish Day Trading
Signal
The
bearish
trading
signal occurs on the thirty-minute chart when the common sense
bullish trend line is broken or one notices
a bearish chart pattern on or near the key resistance
level.
Stochastic
Bearish
Trading Entry
The
entry occurs on the five-minute chart as the price retests the rising
channel after breaking below
it or the resistance
level that was highlighted on the two-hour. One may notice either a
head and shoulders chart pattern or another reliable bearish
chart
pattern on the five minute chart in the vicinity of the resistance
level
that
was highlighted on the two-hour chart.
Key
Points
The
oversold stochastic
indicator
is
always highlighting a support level.
The
overbought stochastic is always highlighting a resistance zone.
Bullish
chart patterns or trading set-ups often
form
in the vicinity of a solid support level, but bearish
ones are
on
or near reliable resistance levels.
The
oversold and
overbought stochastic are just warnings, and technical
traders
must wait
for
confirmations by focusing on the price-action.
A
bullish breakout will occur in the place of the bearish trading
set-up
if the price breaks above the resistance, and turns
into a
support
level.
A
bearish breakout (breakdown) will occur in the place of the bullish
trading set-up
if the price breaks below the support that turns it
into
a resistance level. To
control the risk, one ought to apply a top-down day trading method.