BSAR Trading System - Slow Stochastic Oscillator

1. What is a Stochastic Oscillator?
• It is a graphical depiction of a Mathematical formula, which compares a security's closing price relative to it's price range over a given (predetermined) time period.
2. What is the difference between Fast and Slow Stochastic Oscillator
• Stochastic Oscillator is termed as %K and it's 3 period moving average is termed as %D. It's the %D's divergences that it's inventor Dr George Lane emphasized upon. So in order to reduce noise and focus on %D, another 3 period average of %D is taken and it is termed as %D Slow. Now if you take a moving average of a moving average of the same period, it is nothing but Triangular Moving Average. And Triangular Moving averages assign maximum weight to the middle of the data series, thereby developing smoothly as we watch them, so that acting upon the signals is relatively easy.
3. What are the Optimum values for %K, %D, %D Slow?
• 7,4,4
4. What are the various ways in which Stochastic Oscillator could be interpreted?
• Buy when the Oscillator (either %K or %D) falls below a specific level (e.g., 20) and then rises above that level. Sell when the Oscillator rises above a specific level (e.g., 80) and then falls below that level.
• Buy When the %K line rises above the %D line and sell when %K line falls below the %D line.
• Look for divergences
5. What is Jake Bernstein's Stochastic Pop?
• Use the Slow Stochastic (14,5,5)
• When Slow Stochasticgoes above 75% level then BUY
• Exit when %K and %D cross
• When Slow Stochastic goes below the 25% level, then SELL
• Exit when %K and %D cross
6. How is Slow Stochastic (7,4,4) implemented in BSAR Trading System?
• Buy when the asset or a security closes above BSAR and Slow Stochastic (7,4,4) %D rises above 20 after falling below it.
• Buy More when the asset or a security closes above High EMA and Slow Stochastic (7,4,4) %D is above 75% level. (Full Implementation later)