I bring to your attention the stochastics modernized - Stochastic indicator, the index. It is perfect for the analysis of the asset when the market is flat is (sideways). The general principle of the indicator is simple: if the curve indicator reverses and moves down - a signal to the option PUTIf the curve indicator turns and moves up - it is a signal to the option CALL. Watch for crossing should also be smooth and short lines.
Set indicator SMI Ergodic Oscillator on the chart easy to live:
Externally Stochastic indicator, the index very similar to the conventional Stochastic. However, there is a smooth line, not as sharp. By default, there are certain settings, but if you want the trader can change them at will.
So, if the asset side there is a trend that's what the signals from Stochastic indicator, the index you can use:
- If the curve line of the indicator is high up, then turns around and begins to move down, and the blue line hit the orange from top to bottom (and thus smoothed over the line is short), you can open the option for a fall PUT.
- If the curve line of the indicator is at the bottom, then turn and see the movement upwards, while the blue line hit the orange from the bottom up (and thus the line is smoothed over short), you can open the option to increase CALL.
- If the curves move unidirectionally, without crossing it is better to abandon the purchase of the option.
This indicator is not for nothing called Momentum, as it has incorporated the algorithm of the famous technical tool of the same name. Its smoother lines are achieved precisely due to the fact that Momentum allows you to perfectly smooth and suppress market noise.
SMI Ergodic Oscillator has especially proven itself in the stock market. On the Forex currency it is used much less. Since it has absorbed all the best from two popular indicators, this version of the Stochastic reduces at times the false signals, which the classic version unfortunately gives.
It is better to use it in addition to other indicators. He has proven himself to be paired with MACD, RSI and Bollinger Waves.
With it, it is easy to conduct long-term trend trading. When the movings are for a long time above the zero level, the trend is up. As soon as they intersect with him and go into the negative zone, then the tendency changes to the opposite.
If you use SMI Ergodic Oscillator as an oscillator, then I recommend changing its levels to + 0.5 and -0.5. This will significantly increase efficiency and accuracy.