IntelliChart Realtime Blog

Trading Tips: Using Pairs Reversal Strategy Signals with Stochastic Oscillator Indicator.

Stochastic Oscillator indicator can be used with Pairs Reversal strategy to filter false signals and strengthen the success ratio.

Here is sample chart to demonstrate how to use. See the ACC (NSE) Intraday chart below,

(1) Take Short (Fresh Sell) position, because the stochastic trend is short (Sell mode) and the signals is also Sell (short entry).

(2) Take Long (Fresh Buy) position, because the stochastic trend is long (Buy mode) and the signal is also Buy (long entry).

(3) Exit the position, because the stochastic trend is reversing. no need to wait for exit signal by Pairs Reversal.

(4) Avoid the buy signal (long entry), because the stochastic is in Down (short) trend.

(5) Avoid the sell signal (short entry), even the trend is in Down (short) trend. Because the trend is nearly ended. So when a signal comes on end of the trend, then avaoid that signal.

So now using this method, you are avoided 2 false signals.