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GREGOIRE_TARDY@xxxxxxxxxxxxxxxxxxxxxxxxxxxx wrote:
>
> What do you mean by "The bigger its value, the longer the lag." ?
>
> Would it mean that the probability of a trend reversal is higher when
> %K crosses %D and %D value is relatively high or low ?
>
> Gregoire.
>
No. Trend reversals and Stochastics crossings have little correlation. Market
noise (prices moving randomly short term)correlates well with crossings.
If D is bigger, than K will cross less frequently but later in time, just like
prices will often cross a 3 day moving average, and far less often a 200d long
moving average.
D crossing later, and using this as an entry signal to buy or sell, you'd simply
buy and sell later, meaning potentially quite some time after themove started,
possibly when it is already over. D smaller and crossing earlier, you'll get in
faster but may get into many false starts as well. markets being very noisy,
this can hurt profitability a great deal.
Gwenn
>
>
> > When one is trying different periods for %K, what does one set the %D for?
> >
> > Thank you
> > Zane Kori
>
> Any number you wish, %D is an averaged %K, so it is the signal lead line. The
> bigger its value, the longer the lag.
>
> Gwenn
>
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