Slow Stochastic indicator
November 14, 2005 by Trader Rich
I have to say I am quite surprised from the results of my data crunching yesterday. I used many different slow stochastic parameters and EUR/USD data from 2004 and 2005. I will post the results later but if I were to use the slow stochastic as the only indicator for buy and sell signals during the last 2 years, I would consistently be losing money. I should mention that a buy or a sell is constantly being reversed depending on the crossover so during the simulation, I always have a position.
This is obviously not a real-world simulation as I would not use 1 indicator to give me a buy/sell signal. This priliminary test shows more that 1 indicator should never be used alone. I am going to develop a more complete test plan using the slow stochastic indicator and will post it later. Off the top of my head, I may establish a minimum or maximum value to sell or buy. For instance, if a crossover occurred yet the slow stochastic value does not indicate a overbought or oversold condition, don’t enter the position. Only enter the position if the crossover occurs above 70 or below 30.
Does anyone have any input on the slow stochastic indicator and what may be the best way to test?
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