Momentum trades are by Far the safest and most secure transactions to earn Forex. Momentum is based on the concept that a market in motion tends to remain in motion; meaning that if a market has gained up sufficient steam to head in a particular direction then it will often stay moving in that direction. Moreover it will have a nice surge of counter pressure to find that market to turn around. The theory is simple Of course, as all concepts are, but the practice would be a lot harder if it weren’t for one of the most beautiful trading instruments known as the stochastic indicator. The stochastic is nothing more than a momentum indicator that could provide advanced warnings of a marketplace that’s weakening in its resolve to continue in its current direction.
The stochastic is a Set of two lines with the name add. Both of these lines have differing sensitivities to market changes, with percent K being the most sensitive. These traces are plotted on a scale from 1%-100%, with 100% being the greatest possible value. There are a number of ways to use these lines as market causes but here are the top 2. First is an overbought and oversold indicator. When the lines on a stochastic indicator move below the 20% range or above the 80% range these are causes of a market being bought or oversold. A simple trade is to buy when the stochastic breaks out from being under 20 percent and moves upward. The opposite could be equally correct. After the index breaks out downward from 80% is a time to sell short, or leave a long position.
Secondly is trading The crossovers of these lines and MT4 インジケーター. As you remember there are two lines at a stochastic indicator %K add. When these lines cross there’s good reason to suspect that a market trend is going to change. Now this alone could be a fantastic cause for trading in or outside of a Forex position. But when combined with the ranges mentioned above you have a more sure thing. Waiting until a stochastic falls below the 20% mark AND crosses another line can yield a high probability trade. The reverse is of course true when the indicators are equally in the 80 percent or greater range. Used as timing Indicators, stochastic can be a real assistance to time Forex market positions and they’re best served when used in conjunction with other signs, either principles economic conditions or technical classical chart patterns.