I want to welcome you too to this video. You know, we started yesterday looking into technical indicators to avoid like plague on your mt4 charts. And of course yesterday we talked about trend lines. If you have not seen that video, you can find it here.
All right. The second technical indicator you need to avoid on your mt4 chat is stochastic. Right here you see, I mean this, this indicator was created in 1950s I think. 1956 or 55. Okay. And it wasn’t created for, for forex, it was just created for stocks and imagine using 1956 indicator in 2020. So not that may be a stochastic is bad, but the way people are using it is very, very bad.
The concept of Stochastic says that once the graph is above line 80, it’s called Overbought in which the Trader would be looking for an opportunity to Sell or go Short and if the graph goes below the 20, it is termed Oversold in which you as a Trader would be looking for an opportunity to Buy or go Long . And when off cause when he goes below this 20 line. Okay. They say, okay. Yeah, it’s oversold and we’ll be looking to buy, I tell you something that is very shocking and I know that you might put simply against it, is in forex.
Forget anything called overbought or oversold. Yes, forget it. If get it, then you will begin to profit from your forex trade. If you argue with me – well, how has that work for you. Let me show you something. This is indices. This is daily chart. This of course, look right here. When we talk about overbought – of course looking right here.
Let’s see. Take a look. Take a look at this chart. Okay. Right here. This is, this is overboard. Okay. This overboard in which many people would be looking for opportunities to shot this market. But after this time. See how far the market still goes up. He goes, okay. Yeah. Right here. The people was, okay, y’all, let’s shot. They will shot at this place. I possibly put that surplus here, see what happens.
It’s bounces back. Okay, so I mean, this is what the big boys do. They invented this theories to just take your money. You know, as a retailer forex traders. You know, otc forex traders . I mean somebody told, somebody, told somebody, told somebody and you are told that is exactly what we have been doing. And I’m telling you right now that all you need to do is what Remove stochastic. Remove it from your chart. Okay. Remove you from chart and if you want to use it, use it in a better way. Let me show you how I use my stochastic. Okay This, this stochastic, as you can see right now. Oh good. Jesus. He is totally different to what you have. Okay I’m that particular chart that I showed you there. Of course what I did was I removed.
Okay. The levels, I remove my main signa and I just leave the only signa. Okay. So the signa and ofcourse the parameters also I kind of edited it out – small, I mean in my over 12 years experience of trading Forex market I’ve tested of different settings for stochastic and this is the one that works best for me, that works best for me and I don’t really use it to just enter like that, I just use it for confirmation of my trades.
Okay. If the market for example, I will not be buying when it is above 80, which called the overboard and of course I will not be selling, which is bellow 20 popularly known as oversold. We joke. But what I use it for is, okay, if I want to go long, I want to see is my signa, the stochastic is it moving us is it trending. So if it’s trending up, yes I can use that opportunity to confirm them my position that am holding is true.
Okay. So this how I use it and I hope you will that you would take a lesson from that. And if you go against what I’ve just said, please leave your comments below this video. I want to hear your view. I don’t know all, I’m free to be corrected and now of course I stand to be corrected. That is why we do what we do. So go ahead and leave your comments like this video, share it on your Facebook profile and subscribe to this channel. If you have not done that, and see you in tomorrow’s video.