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# Stochastic secrets

A.Preamble
Thepurposeofindicatorsappearstobe misunderstoodbyacertainclassoftraders. Anindicatorcomesinhelptoatraderinthe nextways: Ifweconsiderthefactthataclassic indicator(Stochastic,RSI,Bollinger bands,movingaverage,ADXetc.)is usedbyabigpercentoftheactive traders,wecanpointtothe conclusionthatallofthem,seeingat acertaintimeacertainsignal(or almostthesamesignal)oftheclassic indicatortheyuse,willbetendedto actinthesameway.Thisistheresult ofthesocalledmasspsychology.So, anindicator,helpsatraderbyoffering himatipregardingwhatthemajority seesand,asaresult,istendedtodo; Iftheindicatoriscoupledtoa profitablestrategy,itssignal(s) contributetoamuchbiggercertainty; Insomestrategiesitoffersabetter priceoranadvantageousmomentfor thetradeopening.

B.Quotes

## The losers teach you, the winners feed you.

Titus

If for a song, a certain instrument will make the song complete, for a trader, an indicator would ennoble the trading style.

## "Stochastic helps you to <<listen>> to the market."

Aiyahmarklah

P.S.Everyindicatorhasitslimitations. 1

C.Stochasticsettings

## Values Parameters Levels 80 K%=3 D%=2 Slowing=3 MA=simple Pricefield= Low/High 70

80 70

50

50 30 20

30

20

2.Knottedcrossing(kc)

D.Entrypoints

## Characteristics: itoccursover(oron)the70or80 level/under(oron)the30or20level; makesaknot1; aftertheknot,itreturnsinthe7030(80 20)interval.

1.Classiccrossing(cc)

## Knot=aseriesof(usual)3consecutive intersections,disposedhorizontallyorangled, occurringoutsideoronthe3070interval, intersectionsfromwhichonlythelastisreliable.

Interpretation: Interpretation: ifitmovesover70butnotover80,wait togetunder70andthensell; ifitmovesover80,waittogetunder80 andthensell(onalowervolatilityits recommendedtogetunder70); iftheknotformsabove70butnotover 80,waittogetunder70andthensell; iftheknotformsabove80,waittoget under80andthensell;

80 70

50

30

20

80 70

3.Reversedcrossingoutsidethe3070 interval(outsiderc)
Thereversedcrossingdiffersfromtheknotted crossinginthisway: betweenthefirstandsecond intersectionthereisafreespace(no otherintersections)thatcorrespondson thechartwithatleast2closed candles/bars.

50

30 20

Specifications: forrecommendedclosepointsseeF.

## Characteristics: occursoverthe70level/underthe30 level; has2intersections; betweenthefirstandthesecond intersectionthereisfreespace; thesecondsignalisoppositetothefirst.

4.Reversedcrossinginsidethe3070 interval(insiderc)

## has2intersections; betweenthefirstandthesecond intersectionthereisfreespace; thesecondsignalisoppositetothefirst.

5.Powerpeak(pp)

Characteristics: consistsof2classiccrossings(asaresult, occursoverthe70level/underthe30 level); onaflatoradescendingtrend(whensell isexpected),thefirstintersectionwillbe ahigherhighandthesecondintersection anewlowerhigh; onaflatoraascendingtrend(whenbuy isexpected),thefirstintersectionwillbe alowerlowandthesecondintersectiona newhigherlow.

Interpretation: ifonaflatordescendingtrend,itgivesa ccsignaloverthe70level,buttheprice remainsinconsolidation,waitforanother ccsignalunderoronthe70leveland thensell; ifonaflatorascendingtrend,itgivesacc signalunderthe30level,buttheprice remainsinconsolidation,waitforanother ccsignaloveroronthe30levelandthen buy.
Higher high

80 70

50

30 20

Specifications: recommendedifthecorrectionreceiveda classiccrossingbuttheimpulsedidnt, withthescenariothatstochasticcouldnt giveaswellaclassiccrossingsignaland reversedcrossedinthe3070area; becausetheoutsiderctendstobe strongerthantheinsiderc,more attentionandagoodmoney managementarerequired.

Lower high

80 70

50

## 30 Lower low Higher low 20

6.Divergence
Asmanyotheroscillators,stochasticalsoshows divergences.

8.Minus

7.Arc

## Characteristics: outsidethe3070interval,itmakesanarc (alongloopwhichstaysoutsidealong while).

Interpretation: ifitoccursinsidethe3070interval,a) lookforasignalonalowertimeframeor b)waituntilthelinesunmergeandopen apositioninthatdirection(whichshould bethesameasthedirectionindicated beforethemerge)otherwisedontopen anyposition; ifitoccursoutsidethe3070intervala)if youhaveanactiveposition,lockaprofit andwaittheeventualityofcontinuation ofthepreviousmoveorb)treatitlikea cccrossing.

80 70

80 70

50 50 30

30 20

20

## Specifications Thisproceduresrequiresabiggerstop loss.

E.Waitingmoments

Interpretation:

1.Endoflownoise(eln)

80

## Interpretation: waituntilstochastictouchesthe50level andthenyoucana)waitforsignals specifiedinD.orb)ifitcomesfromlevel 30,buyandifitcomesfromlevel70,sell.

70

50

30 20

80 70

2.Continuationstatus

Interpretation:

50

30 20

1.Endofhighnoise(ehn)

F.Closingpoints

1.Theoppositesignal

Titus

Values

Parameters

Levels 80

K%=30 D%=4 Slowing=4 Values K%=5 D%=3 Slowing=3 MA=simple Pricefield= Low/High 80 20 Parameters Levels MA=simple Pricefield= Low/High 20 Titus

G.Otherstochasticsettings

Values K%=8 D%=3 Slowing=3 MA=simple Pricefield= Low/High Parameters Levels 80 20 aiyahmarklah

Parameters

Levels 80

50 20

Parameters

Levels 80

50 20

Parameters

Levels 80 20