Understanding the Stochastics Oscillator
The Stochastics Oscillator has stood the test of time since George Lane developed the classic indicator in the 1950s. Despite its senior status, the tool does an excellent job measuring relative strength and weakness cycles in the modern electronic market. But the majority of traders fail to take full advantage of the calculations because they misunderstand its purpose and power.
According to popular belief, we're supposed to sell when the Stochastics fast line (%K) crosses below the slow line (%D), and to buy when it crosses above the slow line. That sounds simple enough, but the technique doesn't work because the crossovers fail to pick up strongly trending markets. Fortunately, there are two better ways to apply indicator output:...608 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.