The Stochastic Master Move For Short Term Trading: Imagine if you want a giant ocean with tides, waves and waves. Short-term traders focus on the waves, market movements that occur daily or throughout the day. If you were to operate with these waves without taking into account the direction of the tides and the waves, what could otherwise be good operations can result in losses of money simply because the market was in a sense when you thought you would go in the other one. The Stochastic Master Move focuses on operating with the waves only when they are aligned with the waves, and when the waves are in line with the tide, ensuring a solid basis for making decisions.
Stochastic is an oscillator, which assumes that short-term market movement is random but the pattern of randomness follows a longer-term trend. Imagine a man walking a dog on a leash. The dog moves from one side to another in a random way according to what catches his attention but the pattern of randomness follows the path by which the man takes him walking. The stochastic provides a large number of signals, the most basic is the crossing of the trend. Crosses can occur when two stochastic lines,% K (the dog) and% D (the man), intersect with each other or when crossing over or under the upper or lower signal line. This indicator can be found embedded in the IQ Option graphic under the tab in the lower left corner. For this analysis, most traders start using it with the default settings and then adapt it according to their preferences.
This is a strategy of multiple time periods using the longest period of time to establish the tide or market trend. The intermediate period of time represents the waves and the shortest will be the waves. The long period of time is one day, the intermediate period is one hour and the short period can be anything from 1 minute to 10 minutes depending on the type of expiration you prefer.
Master Play Tactic
In an ideal situation, you would wait until a strong signal occurred on a daily chart. A strong signal is when both stochastic lines move in the same direction as the crossing. This would coincide with key market news, a rebound from a long-term trend line or some other event that generated a strong movement. If the stochastic moves upward following a bullish cross, the tide is rising, if the stochastic moves downward following a bearish cross, the tide is decreasing.
Once this occurs, go to the one hour chart and evaluate the situation at this level. Ideally, once again you wait for the next strong signal to occur. If that signal is in line with the daily chart, it is an indicator to operate in the same direction as the longer time interval, it can be moved to the lower level. If this were not the case, you have to wait for the next crossing to take place with the exception of rechecking the longer time interval when you are sure that the analysis is correct.
The shortest time interval where it is really put to the test. If the daily charts and hour by hour are aligned indicating that the way and the waves move in the same direction, then all the crossings in line with that analysis become potentially viable input signals. These signals are still correct until the prices reach the end of the movement as indicated in the hour-by-hour charts.
At that time, traders are advised to move away from the market and restart using the daily charts.