I've decided to continue exploring various instruments. Today we'll talk about oscillator. But before we start, I have an important message for you. Using indicators with their default settings will not yield good results. I try to tell you not only about basis but about different specificities of each instrument. That will make your more diverse.
consists of %K and %D lines. It also has percentage scale and oversold/overbought zones (If you are interested in detailed the calculation, you can fund the information on the net).
1) When %K line goes out from the oversold zone.
2) When %K line crosses %D line upward (this signal also gives many false signals and I don't recommend you to follow it).
3) Various divergences and convergences of indicator and price.
Correct indicator setting is very important. Depending on the time frame that is comfortable for you to work, use next settings:
1) time frame less than 1h: (5,3,3)
2) time frame from 1h to 1d: (10-20,3,3)
3) time frame 1w: (21,7,7)
And remember: the main specificity of is that it gives many false signals when the market is in trend. In the next article, I will prepare information about filtration methods of false signals of this indicator.
Comment if you are interested in such information. Thank you for likes and followings!