Wednesday, March 19, 2008

Simple Application of Slow Stochastic

The slow stochastic is constructed with two lines moving average just like MACD. Likewise the application is also exactly the same as MACD that is when both line is moving upwards meaning the market is going up or vice versa. The interception point of slow stochastic signal a reversal of direction just like MACD.

Despite of the exact application of the two, slow stochastic has a major advantage over MACD. It's speed of movement faster than MACD and it moves closely following the real live chart movement. Therefore it is heavily used by daily traders to take advantage of the short-term volatility movement of the chart. See the chart below as MACD moving downwards once but stochastic has already take two cycle to downwards direction. This major advantage making slow stochastic as the most popular indicator of all.

Slow stochastic is almost universal usage, and every traders who have known about its application will use it. The most effective application of this indicator is by combining with other indicators and also the in depth understanding of multiple time frame

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