StochasticOnPriceVSwma Indicator For MT4
Table Of Contents:
- StochasticOnPriceVSwma Indicator For MT4
- Trading ideas with the StochasticOnPriceVSwma Indicator For MT4
- StochasticOnPriceVSwma Indicator For MT4 - Modified Stochastic
- StochasticOnPriceVSwma Indicator For MT4 - Divergence
The StochasticOnPriceVSwma Indicator For MT4 overlays the Stochastic Oscillator on a price chart. When the %K line crosses above the %D (Signal) line in oversold territory, a Green dot gets printed on price. Conversely, when the %K line drops below the %D line in an overbought area, a Red dot gets placed on price.
Trading ideas with the StochasticOnPriceVSwma Indicator For MT4
One of the best trading tools that you can use for directional trading is the stochastic oscillator indicator. The reason being is because the oscillations that it creates are reliable and more accurate for every up and down cycle which is happening in the actual market.
In the stochastic oscillator, you will find that there are two lines that are oscillating across the screen and usually you will be trading the crossovers when the market is in certain zones like the end oversold or overbought areas. The normal stochastic oscillator is usually found at the bottom of your chart.
Meaning that in the case of the standard stochastic oscillator indicator, it will actually have its own indicator window.
StochasticOnPriceVSwma Indicator For MT4 - Modified Stochastic
The Stochastic oscillator that I am presenting you to you today is not attached to the bottom of your trading chart. As you can see in the screenshot below you can find it superimposed over the price action therefore it makes the technical analysis process more seamless because your focus is mainly in one frame.
Looking at the image above, you can see I have pointed out to you trading opportunities that you can look out for when you use the indicator independently. I presented you with both a buy and also sell opportunity that you could have capitalized on.
Before I go into the descriptive details on the trading opportunities, I just want to mention that the signaling process for buy and sell is just a general trading approach that you can use. As you can see that the stochastic oscillator has two lines. One is aqua and the other one is yellow.
The signal line is your light blue line. So every time this light blue line crosses the yellow line then you should prepare to buy or sell. However, you should prioritize those trading opportunities that are backed by strong reversal signals.
In the image above, the first opportunity was a buy trade, whereby the light blue line crosses the yellow line to the upside then referring to the price action you will see that there was reversal price activity forming which came in the form of a Doji candle and a bullish engulfing pattern. This was a perfect moment to buy.
The next moment, to the right of the screenshot, we have a sell trading opportunity. Here we saw that the market formed a bearish engulfing pattern whilst the stochastic blue line crossed the yellow line to the downside. This was also another great moment to enter the market - for a shot trade in this instance.
StochasticOnPriceVSwma Indicator For MT4 - Divergence
Reversal trading opportunities come in different forms, and to improve your trading results you should try and incorporate divergence trading as much as possible because this adds a great deal of accuracy to your outcomes.
Therefore it is fruitful to make use of regular divergence patterns. Below I have presented to you a bearish regular divergence trading pattern which is basically a sell reversal trade.
Referring to the image above you can see that the price action was making higher highs but at the same time the stochastic oscillator indicator was making lower lows thus informing the trade narrative of going short.
What further justified our sell position, was the fact that if you were to look closer at the price action the moment the setup takes place - you will see that there is actually a bearish engulfing pattern that has formed. This form of confluence does not happen much of the time but if it does, then it gives you a strong indication that the market is definitely going to reverse.
Therefore, maximize all these opportunities that resemble this type of trade setup. If you wish to capitalize on bullish trades of a similar nature, then all you need to wait for is a price structure that reveals a bullish regular divergence trade set up. This becomes noticeable when you see that the price action is making lower lows whilst the stochastic indicator is making higher highs.
This is a strong suggestion that the market or the prevailing downtrend is losing momentum therefore it is a good moment to buy. This modified stochastic indicator has proven to be a great tool. It was revealed that it works great for recognizing reversal trade setups.
However, it was pointed out that you should not really trade every single reversal signal that comes about with the help of this indicator. What you need to do is wait for a price action pattern that also confirms or aligns with the reversal directive as indicated by the stochastic oscillator.
So one of the best reversal patterns you can use as a trader is an engulfing candlestick pattern. Beyond that, we also realized that you can use this indicator to trade regular divergence setups. As pointed out we referred to a sell set up which came in the form of a bearish regular divergence opportunity.