Intraday trading method with the help of Stochastic oscillator, it is designed to oscillate between 0 and 100 range in the bottom of the price chart. Low levels mark oversold markets, and high levels mark overbought markets. Overbought means too high as per our picture its above 80, then its ready to turn down. Oversold means too low below 20, and ready to turn up.
This stochastic method is positive divergence or negative divergence technique.
Let see the negative divergence first , A negative divergence is when the stock price break the old high-01 to new high-02, but the Stochastic indicator makes only a slight high and does not break the old high.In this market condition you need to go for short that means sell nifty future, and keep the target for stochastic 20 line area,use stop loss at 25 to 35 point of nifty future.
You can do the trade in the opposite side direction with help of positive divergence technique, how to do a positive divergence?if the stock price drops to a new low, but the Stochastic indicator makes only a slight low and does not break the old low.in this market condition we can go for buy with target of stochastic 80 line and with the stoploss of 20 to 30 point of nifty future.
Keep in mind never buy nifty when the stochastic is high also don't sell nifty when stochastic trend in low.For new traders initially this type of trading method can confuse for a time , once you start to apply in the demo trade you can get more idea how to apply this stochastic method in live trade. Above picture is an example for stochastic oscillator indicator Negative divergence technique.
Happy trading.
Let see the negative divergence first , A negative divergence is when the stock price break the old high-01 to new high-02, but the Stochastic indicator makes only a slight high and does not break the old high.In this market condition you need to go for short that means sell nifty future, and keep the target for stochastic 20 line area,use stop loss at 25 to 35 point of nifty future.
You can do the trade in the opposite side direction with help of positive divergence technique, how to do a positive divergence?if the stock price drops to a new low, but the Stochastic indicator makes only a slight low and does not break the old low.in this market condition we can go for buy with target of stochastic 80 line and with the stoploss of 20 to 30 point of nifty future.
Keep in mind never buy nifty when the stochastic is high also don't sell nifty when stochastic trend in low.For new traders initially this type of trading method can confuse for a time , once you start to apply in the demo trade you can get more idea how to apply this stochastic method in live trade. Above picture is an example for stochastic oscillator indicator Negative divergence technique.
Happy trading.
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