When people first learn about trading in stochastics, it seems so ridiculously simple. We are all taught that there are several ways to trade stochastics. The most commonly taught methods are usually to buy when the lines cross more than 20 or the stochastic lines intersect in an upward direction. You should sell when the lines fall below 80 or when the lines intersect. Of course, stochastics have other trading methods, but these are the most common methods.
Can’t a child do that? Just when you trade x happens. When learning the rules of trading stochastics, most people immediately draw a table to retest the strategy. It’s like doing a homework test when you test the strategy back. When you see the lines intersect or go below 20 or 80, you almost look like a winner, don’t you? What is it called? false advertising. You do not have to accept my word for this. You can trade stochastics using these methods to see for yourself.
What you will notice is that the lines cross more than 20 or under 80 times more than you see in the back test. Here’s what you don’t see: All the periods when the lines go a little bit, and then all the lines above 80 or 20 go back to go back. This is the problem with indicators like stochastics. They are do not be late. They are delay is a great time.
You have to think about it logically. 95% of Forex traders can’t make money. If something as simple as trading stocks can make you successful, why do so many people fail? Just because statistics don’t tell you anything about market prices and market movements. Do yourself a favor and just eliminate it all indicators try to see this in your schedule as seen by the pros (5% of people who make money). They can look at something like a simple bar chart and read the energy of the market.