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Regarding the value of stochastics indicator
Lets remember that an indicator is not a system. Indicators are only as good
or as bad as the way that you use them as part of the system. If you use an
indicator for the right task it will appear to be a good indicator. If you
try to use it for the wrong task it will appear to be a bad indicator.
In my experience I have found Stochastics and RSI to be almost
inter-changeable. They both do a good job of timing counter-trend trades in
a trading range environment or they can do a good job of buying dips in an
uptrend or selling rallies in a downtrend. No point in using both in my
opinion and I usually just use RSI because I am more comfortable with it. If
you ever try to use stochastics (or RSI) to trade counter trend in a trending
market you will lose a lot of money in a hurry.
Chuck LeBeau
traderclub.com
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