Cash Cow Strategy Using Mobile

This is just a step-by-step guide on how to apply my cash cow strategy with your mobile. This is designed for new traders.  

You can check here to see how it is traded on a desktop. 

Sometimes we have intraday movement in the Forex market like the image you looking at below. It’s a prolonged move in one direction caused by either economic events or a large order flow by traders. It can be referred to as an intraday trend. This can be anything from a 100 points move(called pips in Forex) in one direction.  Anyway, our own part is to get in on the move and make some money from it.

Let me just explain a pip to you.

Take a look at the image below, look at the highest figure to the right of the chart 1.23900, {we consider mainly the four digits after the decimal 1.2390}. Now look at the next figure below, that’s 1.23855 {we consider the four digits after the decimal 1.2385}. So it means between 1.2390 and 1.2385, we have a difference of 5pips. That five pips can be 5cents or $5 or $50 depending on the lot size a trader is trading with.

Our aim is to catch as many pips as we can. (Note – you can also lose pips if you find yourself on the wrong side of the move).

This strategy is designed to get us into the move from the circled area. In other words, the move had commenced, and then we get into it and follow it up. So in this case, it’s a trend catching strategy

We are going to need indicators, so here is how we load the indicators. Just click on the image sign below.

It will bring you this page, and then you click on the symbol in the image.

It brings you a list of several indicators to choose from. Click the moving average.

Change the period of the moving average to 50 and ensure the method is “simple” just like the image below and click done.

You would see the moving average on the chart, repeat the same process again, this time,  the period is 20 and the method is ‘exponential’ just like the image below.

You can change the colors of both moving average indicators so you would be able to identify them.  The two moving averages will appear like the image below. The red is the 50 moving average while the green is the 20 moving average.  In the same way, you can put the RSI indicator and the stochastic indicator.  

 

 Here is how to apply the strategy.

Step 1  - Put your chart to 5mins. I explain how to do that on this page .  Whenever the green moving average crosses the red, start getting ready. Check the image below.

Step 2 –Clearly the two moving average had crossed each other…Now keep an eye on the stochastic.

Moment stochastic crosses and the two moving averages are WIDE APART (connoting a strong trend) like the image below, you place a buy. Check how to place a buy order in forex trading on this page.

The green line on the chart is the place you entered your trade. The red line below is where you put your stop, in other words, if the price goes below that place, it takes you out of the trade with a small loss. The red line above is the place you put your take profit, in other words, if the price reaches that place, the platform exit you automatically for a profit.

You can exit your trades manually or you can use stop-loss orders and take profit orders and the platform will exit you automatically.

Put your stop loss below the lowest candle around where you entered, your take profit can be 10 to 15pips from your entry point. Sometimes, the price can even go 40pips in your direction, and sometimes, it reverses and takes you out on a loss. With proper practice, you will be getting more profits than losses.

Here is where you input your stop loss and take profit price level.

Step 3 – Watch the market unfold.

Step 4 – Watch it unfold as it’s almost taking out our take profit level giving us a profit.

The above is a sample of how a profitable trade goes.

 

Sometimes, you can attempt a multi-timeframe analysis.

1 - You put your chart to 1hr timeframe and you monitor it from there.

2 - The moment you notice moving average crossing each other on 1hr, you change your timeframe to 5mins.

3 - If the two moving average are still WIDE APART (connoting a strong trend) in 5mins, you watch for the crossing in stochastic.

4 - When it crosses on 5mins, you place your trade.

It is that simple. You can manually exit your trade for profit or you can use a take profit to automatically exit you.

It is simple but very effective. You can give it a try.  

 

THE ADVANCED METHOD TO TRADING WHICH I HANDLE IN MY APPRENTICE TRAINING COURSE

1 How to do a comprehensive price action analysis that puts you in a position to get into the best part of the market move for massive profits.

2 How to spot key levels in the market where buyers and sellers converge to take action so you can advantage of the opportunity presented at this level.

3 How to know the key economical events that move the market, how to analyze these events ahead of time, and position yourself to take advantage of them.

4 How to do proper risk management and trade management also called performance tracking. Check out a sample of it here

5 How to systematically build your account into five and six figures earnings.

6 Finally, How to grow from being a Forex trader into a Forex entrepreneur. This allows you to earn from the Forex market without trading.

Enrol for  The Forex Apprentice Course here and take your trading to the next level. 

Learning Performance Tracking In Forex Trading.

The Forex market is volatile in nature. The movement can most times be unpredicted. You might think it will go up but it goes down and it can go vice-versal. However, people have pitched their tents around it with the hope of earning from it. As a result, price speculations had become the order of the day.

The ability to speculate correctly might not guarantee you success because traders have eventually come to face the reality that speculating correctly doesn’t mean you can predict what your return on capital will be after a certain period of time. You might think you would make 25% profit at the end of a trading month and realize you ended that month in a loss.

You might also project 25% profit and end up with 50% profit which is better than your expectation. You might expect a 25% return and end up with 5%. It goes anyway.

This is why no one can predict the outcome on a trading account at the end of a trading month. Even the banks don’t attempt to do that. As long as it’s a speculative venture, it falls under the world of probabilities.

Note – With this truth established about the reality of the trading and investment world, you should be wary of people that promise a fixed amount at the end of a trading month. Professionals leave it to probability.

However, to ensure you do well in the world of speculations and probabilities, you need to understand that your own performance needs to be monitored. This is necessary because it helps you appreciate when you are doing well and analyze properly when and why your performance drop.

Every business has a track and monitoring performance graphs. 

I'll first show you what a business performance graph looks like before explaining to you what a trading performance tracking is all about. 

Business performance graph looks like the image below.

We can see that they made a profit and grew in sales but the growth was tracked. You can also see that it was a quarterly zig-zag upward movement.

The information derived from this graph can help them know what they did well during the time the graph went up and what might have gone wrong when the graph went down. Sometimes, the reason for the downward performance might not even be an internal factor; it might be a problem of the environment, but performance tracking helps put things in proper perspective.

For a trader, performance tracking helps the mind to keep things in the right perspective at all times. It allows the trader to quickly spot mishaps and make necessary corrections during the trading journey. 

This is what a trading performance tracking looks like:

When traders take on the Forex market, they do so mostly in an unorganized way. They trade the market using more than one strategy. So they end up with a performance result that is scattered. It’s not measurable.

Let me present to you a scenario that explains the benefits of tracking your trade performance.

Let’s assume YOU are our regular Forex trader. What we expect of you like the majority of Forex traders is to trade the market and your account with about 5 different strategies.

While you are trying to figure out your way in trading, you will trade using a trend trading strategy, a reversal strategy, a sideways channel trading strategy, and a breakout strategy. All is mumbled together in one account. The challenge with that however is this:

Every trading strategies have winning streaks and losing streaks.  The losing streaks in one of your strategies will erode the winning streak of another in your strategy.

Assuming one strategy had 5 winning trades in a particular week and another strategy had 5 losing trades that same week, the bad performance of the losing strategy will erode the good performance of the winning strategy for that week. This can lead to a discouraging trading week for you.

If trading one account with two strategies can throw you off balance this way, imagine trading one account using 5 different strategies.  

So let’s take a further look into your outcome in a particular trading week.

You traded with 5 different strategies. At the end of the week, you arrived at 11 wins and 13 losses. On the surface, this was a bad trading week. This is a discouraging week for you.

What you probably don’t realize is that if we delve into proper performance tracking by segmenting each of your strategies  for their individual outcome, we would be seeing something quite remarkable that you not aware of

Now, here is the breakdown of how you arrived at 11wins and 13losses.

 

After Strategy ONE performance was tracked, it had 3 wins and 2 losses. Good trading week.

Chart Performance image.

After Strategy TWO performance was tracked, it had 4 wins and 1 loss. Good trading week.

Chart Performance image

After Strategy THREE performance was tracked, it had 3 wins and 2 losses. Good trading week

Chart performance image.

After Strategy FOUR performance was tracked, it had 0 wins and 5 losses. Bad trading week

Chart Performance image

After Strategy FIVE performance was tracked, it had 1 win and 4 losses. Bad trading week.

Chart Performance image

These analyses revealed that three of your strategy performed well while two did badly. However, the two bad performances eroded the good results the other three produced.

If you had traded each strategy independent of the other using one strategy for one account, you would have been able to see what you were doing right with the strategies that performed well and how to increase their efficacy.

On the other hand, you would have quickly stopped your tracks on the ones that weren’t doing well and come up with proper adjustments to reduce their losses. You could have come up with ways to make them perform better or at best, you could choose to even discard them in total.

Here is why we emphasize proper performance tracking for our students. Trade performance and result performance. This is one of the most important parts of a trader’s journey to mastery. Interestingly, most aspiring traders don’t even have it as part of their trading practice. Proper performance tracking with accountability had improved the overall trading experience of our students.

This accountability concept is required in two-tier structure.

The student is accountable to themselves by filling out the performance. They can see things for themselves. Students score themselves and they are also able to look at it and look for where adjustments need to be made. That’s the first leg of the accountability structure.

Secondly, they are accountable to us because we would be requesting to see the performance chart.

Weekly performance tracking leaves no room for a student to waste any time. If things aren’t working right, the cracks will be spotted and tackled on time because the review is done weekly.

If you would like to enroll in our Forex Apprenticeship trading program where we personally work with our students to improve their trading performance with proper tracking concepts like the one explained above.  Click on this link THE FOREX APPRENTICE to find out what it all entails. The experience and drills make our traders better than any average trader in the industry.  

If you have already started taking baby steps in Forex trading, I explain here how to use Indicators to trade the market. You should take a look. 

THE FOREX APPRENTICE COURSE.

This program is designed to take you from being a newbie into becoming a professional trader. 

From my 12 year experience in the field, I have realized that what differentiates a real professional from self-acclaimed professionals (marketing wizards) is simply the ability to do a real performance analysis, and a real financial result analysis. 

This is important because if you miss it from this angle, you would experience years of ups and downs in your trading career which is due to twisted information painted by traders all over the media space.

On the other hand, if you are guided properly from the angle of real performance and result expectations, your journey into financial freedom through the Forex market will become smoother and worthy of your time and attention.

Your ultimate goal in trading is to be rich with a vehicle that can gradually increase your income via an investment style approach. A passive income endeavor with a potential annual return of 100% - 150% return on your trading capital.

This is a result you can achieve from the forex market if you are properly guided by a real professional. This is quite different from the 100% monthly return painted by most marketing wizards that get traders no-where in actual practice. 

If you start your trading career on the right path, your next 40 years are guaranteed with income potentials that you can control.

Before I go into the subjects of this apprentice program, I will like to ask you a question.

Have you ever heard bank traders or analysts talk about making a 100% monthly return while trading currency? These are the guys that trade millions and billions of dollars and have been in the game for over 40years. 

If you ever wonder which banks trade in the currency market, below are a few names of the top financial institutions involved in currency trading.

💰  Citi Bank.

💰  Western Union

💰  JP Morgan

💰  Barclays Bank

💰  Nordea Bank

💰  Commonwealth Bank of Australia

💰  Saxo Bank

If these guys have been in the currency game for over 40years, it means they find their involvement in the market lucrative to have kept going at it.

I didn’t forget I wanted to tell you about the apprentice program before digressing into the banks' involvements. I also didn’t forget I started this discussion by telling you about the importance of proper result analysis and performance analysis which stands as the bedrock of long sustainable success in Forex trading.

Since we are back to where we started, let’s dive right into it.

These are the 12 things you will be mastering in the training program.

📌  What exactly is the Forex market? Different from what they say the Forex market is. It’s amazing what a paradigm shift can do to a trader’s perspective that becomes the bedrock of success.

📌  How exactly does the Forex market behave? Explaining the reason behind the volatile moves we see in the market.

📌  How to prepare to trade a volatile market. Volatility can be good or bad depending on how traders approach it. We approach it in a way that makes it good for us.

📌  How to tame a volatile market. You actually can’t tame the market, but you can tame your account to handle the volatile market. So in essence, we say you are taming the market.

📌  How to appreciate and do proper performance analysis. This is where you are separated from the rest of the traders that don’t do a proper analysis.  This is where you begin to monitor performance like bank traders do.

📌  How to do a proper result analysis. This is where you take away any form of unnecessary pressure from your account. Proper result analysis is what retails traders don’t do which bank traders don’t joke with.

📌  How to handle your emotions in trading. People talk about trading psychology. What they don’t realize is that real proper leverage of your trading account automatically takes care of your trading psychology. 

A realistic expectation of return on capital as allowed by the Forex market is all that is needed to keep psychology in check.

📌  How to do a proper market analysis. This is trading speculation. This is different from entering a trade. A holistic view of a Forex pair puts you in control of the pair. 

This aspect is what 90% of traders focus on. This is where the majority of online marketing wizards peach their tent neglecting the rest knowledge required.

📌  Why it’s important to follow a particular pair. Each pair has a story of where it was coming from, where it might be heading, and then stops it made along the way. 

In the world of trading, it’s not advisable to look at a pair in isolation and it is not advisable to trade an isolated pair. 

It is preferable to look at a pair in relation to other correlating pairs. There are certain pairs that behave almost the same. It’s advisable to look at them together before making a trade decision. 

It helps to further confirm the story behind the pair that you have been following.

📌  How to enter a trade. There are specific places in the market that your chances of success increase when you attempt an entry. These places are actually few but it’s in your best interest to wait and take your trades only at these high probability profit spots. 

Most of the time, the Forex market is actually in the middle of no-where but it appears to traders as if it’s in a profitable entry zone. Learning how to filter out the bad spots quickly becomes your edge.

📌  How to easily spot when a trade had gone wrong so you can quickly get out of it. You don’t need to tie money down in an unprofitable trade.

📌  Going by the standard financial trading practice, you will learn how to spot a profitable trade a day before it occurs so you are prepared ahead. This type of analysis is carried out on a daily timeframe as recommended by financial standards.

 COURSE MATERIAL

✔  The materials for this course are in video formats and text format.

✔  Series of zoom meetings will be organized between the trainer and the student. About 4 zoom meetings of 1hour each to further explain to the student the materials they were given. 

The materials are quite explanatory but the zoom is included for a one-on-one meeting session.

✔  The student is added to a Whatsapp group where high probability trade setups are dropped periodically. This is to guide the student through their journey towards becoming a professional.

✔  Other passive non-trading earning opportunities in the Forex market will be revealed to the student. These are opportunities that can fetch $100 weekly without even trading. Since we know them and we earn from them, why keep them from our apprentice.

✔  Finally when our trader becomes very proficient (this means they can make a return of about 70% on their investments under the space of 6 months repeatedly with no sweat). There might be a desire to start taking on huge capital of about $25,000 to $50,000.

If they don’t have access to these capitals, we can link them up to get such capital. In the long run, the bigger the capital, the better the returns. The perfect understanding of the performance analysis and the result analysis taught in the course will give the student control over any finance they trade with. 

The size of capital will make no difference to the trader any longer.

 

PURPOSE OF THIS COURSE

This course is designed to turn you into a well rounded professional Forex trader. It’s designed to make you comfortable around the Forex market and to make you hone your game.  

You would be qualified to trade your personal account and also to trade others account professionally if you desire.

The value of the course is $4000.

The fee we are running it for is $200.

The goal is to raise 100 self professional traders who will be armed with a trading knowledge that will transform their lives and the lives of others around their immediate network with the new skills, they will be acquiring.

Are you ready to go? 

We hope you don’t sleep on this. If you are ready, we are ready.

Make your payment to

 Bank name – Guarantee Trust Bank

Account name - Eche David

Account number – 0030480165

Amount to pay - $200.

 

Once the payment is confirmed, your training commences.

You have more inquiries?

Send a WhatsApp message to my personal line using the below link

https://wa.link/4i8tby

Do you even have an idea of what exactly Forex trading is all about? You might want to find out here. 

How To Trade The Forex Market Using Fibonnaci

 

Fibonacci is a huge subject in the world of trading. We have different Fibonacci ratios ranging from Fibonacci Retracement, Fibonacci Extension, Fibonacci Fan, Fibonacci Arcs, Fibonacci Time zones. But for the sake of simplicity, we would be dealing with just the retracement. 

A lot of traders use the Fibonacci retracement levels as potential support and resistance areas. Since so many traders watch these levels in order to place buy and sell orders, this makes the support and resistance levels tend to become a self-fulfilling prophecy.

Most charting software comes with the Fibonacci retracement level tool. In order to apply Fibonacci levels to your charts, you'll need to identify Swing High and Swing Low points.

 

Fibonacci Retracement

The first thing you should know about the Fibonacci tool is that it works best when the market is trending. 

The idea is to buy on a retracement at a Fibonacci support level when the market is trending up, and to sell on a retracement at a Fibonacci resistance level when the market is trending down. 

In order to find these retracement levels, you have to find the recent significant Swing Highs and Swings Lows.

In order to plot it in a downtrend, you would have to click on the Swing High and drag the cursor to the most recent Swing Low and for an uptrend, you would do the opposite. Click on the Swing Low and drag the cursor to the most recent Swing High. 

Let's take a look at some examples of how to apply Fibonacci retracements levels in the markets. 

Uptrend Scenario.

Here we plotted the Fibonacci retracement Levels by clicking on the Swing Low and dragging the cursor to the Swing High. The software now shows you the retracement levels which are 

As you can see from the chart, the retracement levels were 23.6%, 38.2%, 50.0%, 61.8% and 76.4%. 

Now, the expectation is this pair retraces from the recent high, it will find support at one of those Fibonacci levels because traders will be placing buy orders at these levels as the price pulls back. 

Let's take a look at what happened afterward in the image below.

Price eventually pulled back right through the 23.6% level and continued to move down until it tested the 38.2% level but was unable to close below it. The market resumed its upward move and broke through the swing high. Clearly, buying at the 38.2% Fibonacci level would have been a profitable trade!

Downtrend Scenario

Here we plotted the Fibonacci retracement levels by clicking on the Swing High and dragging the cursor to the Swing Low. The software now shows you the retracement levels.

The expectation for a downtrend is that if price retraces from this low, it will encounter resistance at one of the Fibonacci levels because traders will be ready with sell orders there.

Let's take a look at what happened next. 

Price started moving up after the low and broke the 23.6% level into the 38.2% level, then made a slight break there and did as if it wants to come up but eventually went down breaking the 38.2% into 50.0% and broke that level also.

Finally, it was held at the 61.8% level and started an upward move from there which saw the price moving back to the lowest point and breaking past the 0.0% going further down. Clearly a very profitable trade there.

In these two examples, we see that price have a way of pausing at each level making it temporary support or resistance before breaking through that level or retracing back from that level. Because of all the people who use the Fibonacci tool, those levels become self-fulfilling support and resistance levels. 

One thing you should take note of is that price won't always bounce from these levels. They should be looked at as areas of interest.

There is a clause you should always remember about using the Fibonacci tool. The clause is simple; fib level fails at times also just like every other support and resistance indicator. So let’s take a look at scenarios when it fails.

When Fibonacci Fails

Their golden rule of support and resistance with other forms of trading indicators is that they hold at times and they fail at times.  This is why traders need to think in terms of probabilities.

Now, let's go through an example when the Fibonacci retracement tool fails.

The image below is that of a pair that had seen a downward trend. The Fibonacci approach to this is to look for a possible retracement when this pair starts heading up so we can get in on a good level and follow it back down hoping that one of the fib levels will act as a resistance to the uptrend.

So we bring out our Fibonacci tool and draw in from the high of the swing to the low of it like you can see on the chart.   

You can see on the chart that price first made a slight stop on the 23.6% then broke up to the 50.0% level. It dropped down a little bit from there then pushed up above the 61.8% level and we see it go up to the 100.0% and broke it upwards without even considering that level.

Assuming we placed a sell order at 23.6% or 50.0% level because of the way price behaved at those levels, we would have ended up with losing trades. It wasn’t a wrong decision; the price just didn’t respect those levels in this scenario.

The reason for this is because; traders look at charts differently, look at different time frames, and have their own fundamental biases. So a level that might appear as resistance on a smaller timeframe might actually be a support on a larger or a different timeframe.

That's why you need to hone your skills and combine the Fibonacci indicator with other indicators in your Forex toolbox to help give you a higher probability of success.  You can’t rely on only one indicator.

Click here to go to the next lesson.

Click here to go to the previous lesson

Go back to the indicator list.

How To Trade The Forex Market Using Average Directional Index

 

The Average Directional Index, or ADX for short, is another example of an oscillator. It fluctuates from 0 to 100, with readings below 20 indicating a weak trend and readings above 50 signaling a strong trend. 

Unlike the stochastic, ADX doesn't determine whether the trend is bullish or bearish. Rather, it merely measures the strength of the current trend. Because of that, ADX is typically used to identify whether the market is ranging or starting a new trend. 

Take a look at these neat charts we've pulled up:

In this first example, ADX lingered below 20 within the spaces colored blue. Price just couldn’t move aside of the ranging formation. The ADX readings below the 20 is doing a great job letting us know there is no trend in sight.

However, in the next color red section, you can see that the ADX below climbed above 50, signaling that a strong trend could be waiting in the wings.

And true to that, we can see a beautiful downtrend with so many profits to pick from.  Perfectly obeying the readings of the ADX signaling strength in price movement

Now, let's look at another example:

With a perfect similarity to the initial example we treated, ADX lingered around the 20 levels for quite a while. At that time, the price on the chart was also ranging. After a while, ADX rose above 50 and the price also broke out from the range and headed upwards. 

It’s obvious we can see an uptrend when the ADX went to the 50 level. That’s an amazing profit to lock into your trading wallet.

Now the little twist to ADX unlike other oscillators is the fact that it doesn’t exactly tell you whether it's a buy or a sell. What it does tell you is whether it'd be okay to jump in an ongoing trend or not. 

Once ADX starts dropping below 50 again, it could mean that the uptrend or downtrend is starting to weaken and that it might be a good time to lock in profits. 

                                                   

                                                       How to Trade Using ADX

One way to trade using ADX is to wait for breakouts first before deciding to go long or short. ADX can be used as confirmation whether the pair could possibly continue in its current trend or not. 

Another way is to combine ADX with another indicator, particularly one that identifies whether the pair is headed downwards or upwards. 

ADX can also be used to determine when one should close a trade early. 

For instance, when ADX starts to slide below 50, it indicates that the current trend is losing steam. From then on, the pair could possibly move sideways, so you might want to lock in those pips before that happens.

Click here to go to the next lesson. 

Click here to go to the previous lesson

Go back to the indicator list.

How To Trade The Forex Market Using Relative Strenght Index

 

Relative Strength Index (RSI) shares similarities with other oscillators because it is designed to identify overbought and oversold conditions in the market. It is also scaled from 0 to 100. Typically, readings below 30 indicate oversold, while readings over 70 indicate overbought. 

How to Trade Using RSI

The RSI can be used just like other oscillators. Its primary purpose is to pick the potential tops and bottoms price movement. This is determined by using its overbought and oversold readings

We take a look at the chart below to see RSI in action.

Going through the chart above, you can see price trading up in the red rectangle. While price was moving in that direction, RSI moved above the 70 line signaling an overbought which also means we are running out of buyers in that uptrend move. Eventually, you can see that price fell at the oversold reading of RSI.

The reverse scenario took place at the rectangle marked blue. RSI gave an oversold reading as it touched the 30 level. Shortly after, the market ran out of sellers and price made a move for the upside. This is an indicator that when RSI is on the extreme, we should be getting set for a possible reversal move.

 

Determining the Trend using RSI

RSI is a very popular tool because it can also be used to confirm trend formations. RSI is one of the most widely used trading indicators by professional traders just like stochastic and MACD.

One of its beauty is the fact that it can be used to determine if a trend is forming in the market. As traders, we want to always be on the side of the trend and join the move.

Aside the overbought and oversold levels of 70 and 30, a reading of 50 crossing to the upside or to the downside can be of great use to gauge the start of a trend. The 50 line is not highlighted on the indicator software by default; you have to manually put it there by yourself.

If you are looking at a possible uptrend, then make sure the RSI is above 50. If you are looking at a possible downtrend, then make sure the RSI is below 50.

You can see as the crossing of RSI on the 50 confirmed a trend. This also applies if we looking for a downtrend.

Click here to go to the next lesson.

Click here to go to the previous lesson

Go back to the indicator list.

How To Use Stochastic Indicator In Forex Trading

 

The Stochastic is another indicator that helps us determine where a trend might be ending. The stochastic has two lines that cross each other to give a sell or a buy signal.

By definition, a Stochastic is an oscillator that measures overbought and oversold conditions in the market. In a market trending up, prices close near the high, and in a market trending down, prices close near the low.  

 

How to Trade Using the Stochastic

The Stochastic is scaled from 0 to 100 and like earlier established, it tells us when it thinks the market is probably overbought or oversold.

When the Stochastic lines are above 80 (the overbought dotted line in the chart above), then it means the market is overbought. When the Stochastic lines are below 20 (the oversold dotted line), then it means that the market is oversold. 

As a rule of thumb, we buy when the market is oversold, and we sell when the market is overbought. 

Looking at the chart above, you can see that the Stochastic showed overbought when it crossed that dotted line above, based on this, if you sold the pair from there, your decision would be accepted as good because after then, the price started going down, in other words when the price is overbought, sooner or later a reversal move will take place.

The same is true when stochastic shows an oversold reading.  If you bought the pair after an oversold reading, chances are high you would catch the bull run that proceeds after the oversold reading. The chart above explains it. 

Click here to go to the next lesson.

Click here to go to the previous lesson

Go back to the indicator list.