Friday, October 2, 2009

Stochastics – fast, slow & full

ERX - wow this works like charm for Stock 14,3,3 .
asr: we need to find these kind of ones in back testing , how can we do that easily . can we do with stockfinder.com with $35 subscription ..

Q: is this ERX almost like DIG , if so this stocastic 14,3,3 works same on both , find out.
http://www.kirkreport.com/09/erx_10_12_09.gif

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KIRK
You often show charts using stochastics with the following settings 14, 3, 3. Others, like Trader Mike for example, use a shorter period 5, 3, 3. What’s the justification for the stochastic settings you use?

A: The setting is more appropriate for the time frame I trade in which is bit longer than Trader Mike. For example, most traders who use 5, 3, 3 settings use them for intraday charts (i.e. daytrading) versus daily or weekly. His settings are faster but would provide too many whipsaws.

There are three options for Stochastics – fast, slow & full and I recommend reading this tutorial for more info. In addition to 14, 3, 3, another setting I like to use and frequently recommend as a starting point is 9, 5, 5 for all time frames. My recommendation is simply to start there and avoid the temptation to over-optimize the indicator until you’ve gained at least several months of experience using it at those settings.

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