| The Wall Street Mentor Center Our Executive Mentors provide investor education, product enhancements and software solutions on how to become a more successful trader. The purpose of this article is to provide you with invaluable insights into the Stock Market. Today's Topic: STOCHASTICS Last week’s article focused on using a momentum or trend indicator known as the MACD. That indicator combines moving averages to help determine good entry and exit points when a stock begins to rise and fall. Today, we’ll discuss another indicator used to support the signals found when using the MACD. This is known as the stochastic. The stochastic is broken up into five important components. There is a %K line (faster moving average or black line), the %D line (slower moving average or red line) and the 80, 50 and 20 lines. The 80, 50 and 20 lines are range values that give you an indication of sentiment. The value of the stochastic will find itself within, above, or below these averages. This is based on the observation that as a stock price rises, the closing price tends to be closer to the upper end of the price range. Closing levels that are consistently near the top of the price range indicates accumulation (buying). This will put the stochastic value near or above the 80 line. This indicates that the stock is in an over bought range. When closing prices are near the bottom of the range, it is indicative of distribution (selling). This will value the sentiment near or below the 20 line. This indicates that the stock is over sold. The basic concept of the stochastic is that it measures a stock’s current position relative to the past couple of weeks. If a stock is currently at $15; and its range has been between $10-$20 over the past couple of weeks; then it is right in the middle of its range and the stochastic would be at the 50% level. A simple interpretation would be that the stochastic is a measurement of the market’s sentiment. If a stock is at the upper end of its range, people have been buying it recently (that’s what drives the stock up); and if they’re buying it, they must like the stock. If the stock is at the lower end of its range, then people have been selling the stock (selling drives the price down); this indicates that people obviously don’t like the stock. Here is how we interpret the stochastic indicator. Two of the most popular are methods that include: Buy the stock when the stochastic %K line crosses back above the 20 line. Sell the stock when the stochastic %K line passes back below the 80 line. Buy the stock when the %K line crosses above the %D line. Sell the stock when the %K line falls below the %D line George Lane, the creator of this indicator, believed that some of the best signals to buy occur when the %K line crosses back above the 20 line, after it had fallen below it. He also taught that some of the best sell signals occur when the %K line falls below the 80 line, after it had risen above it. As we’ve outlined, buy and sell signals can also be given when %K crosses above or below %D. However, crossover signals are more frequent using this method and can result in a higher number of “whipsaws” (getting in and out frequently at a break-even or at a loss). As the illustration demonstrates, by following the two different stochastic methods for Maxim Integrated Products (MXIM), the following results were obtained: By following the %K method crossing above and below the 20 and 80 lines, we would have bought and sold this stock 11 times in one year. If we were following the %K line crossing the %D line we would have bought and sold this stock around 15 times in one year. The end result would have been approximately the following (the dollar figures include using a 10% stop loss to trigger our sale): %K crossing above the 20 and below the 80 lines = $30 of profit %K crossing above and below the %D line = $19 of profit I personally recommend the first method, in which we buy a stock when the %K crosses back above the 20 line after it has fallen below it, and sell a stock when the %K line crosses back below the 80 line after it has risen above it. Try applying these principles to the stocks that are in your portfolio, and see how you do. Also, compare the stochastic to the MACD and use it to support the trend you see in that indicator. Next time, we will begin to combine all of the information we have discussed the past few weeks regarding support, resistance, trends, MACD and stochastics. This will help you get an overall concept of how to read historical charts If you have a question, comment or suggestion for one of our Executive Mentors, please CLICK HERE InvestrioWall Street Mentors |
 |
| Become an Affiliate Partner of Investrio Wall Street Mentors |
| stock trading software, trading software, stock option software, option trading software, stock software, day trading software, stock market software, stock control software, stock tracking software, stock charting software, stock analysis software, stock picking software, stock ticker software, stock management software, stock investment software, future trading software, commodity trading software, online trading software, swing trading software,buy stocks, stock, stock market, stock quote, new york stock exchange, stock prices, penny stocks, stock market quotes, stock ticker, stock options, stock charts, stock trading, buying stocks, online stock trading, stock symbols, stock reports, stock picks, stock research, stock screener, stock analysis, stock investment, online stock broker, stock and bond, real time stock quote, stock market news, stock tip, buy stock online, stock informationstock trade, stock market history, stock market chart, stock portfolio, stock market price, stock market ticker, discount stock broker, stock investing, stock index, stock news, investing, online investing, investing online, investing money, international investing, option investing, investing for dummy, investing in stock, investing basics, investing tip, stock option investing, woman and investing, investing for beginner, intl investing, beginner investingbetter investing, investing 101, online investing for beginner, start investing, investing in the stock market, internet investing, short term investing, investing software, introduction to investing, investing web site, investing for retirement, investing in commodity, investing on line, investing company, investing stock, investing your money, financial investing, smart investing, commodity investing, online investing tip, basic investing, social investing, investing strategy, investing beginner, global investing, work money investing, basics of investing, investing for woman, index investing, money investing, teach me to trade, stock market education, stock education, education investing, investment training, wize trade, datek, ameritrade, etrade, schwab, trading, online trading, day trading, online stock trading, option trading, future trading, commodity trading, trading system, forex trading, trading software swing trading, stock trading software, internet trading, trading stock, trend trading, trading online, stock trading system, stock option trading, day trading software, stock trading online, future trading system, option trading software, internet stock trading, trading future, trading option, tape trading, online future trading, commodity future trading, on line stock trading, trading strategy, active trading, day trading online, day trading stock, stock market trading, option trading system, day trading strategy, paper trading, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO,trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, INVESTRIO, WALL STREET MENTORS, stock trading software, investment software, investing software, teach me to trade, investrio, wall street mentors, STOCK TRADING SOFTWARE, INVESTMENT SOFTWARE, TEACH ME TO TRADE, INVESTING SOFTWARE, wize trade, INVESTRIO, stocks, wize trade investing, wize trade, stock, trading online, wize trade, online trading software, wize trade,INVESTRIO |
| Welcome International & U.S. Investors |
| We pay you very well to refer our software to your friends & associates. Click Here for Details |
| The Mentor Center & Investment Training 101 ON SALE FOR $99.00! |
| Please Compare The Mentor Center Stock Trading Software & Investing Education To WizeTrade at $3995.00! |
| order by phone at (801) 647-4785 |