Stochastic Gold Trading System
This topic should be called: Combining Stochastics with other Technical Indicators, but Stochastic Gold System sounds real nice.
Stochastic Oscillator technical indicator can be combined with other indicators to form a trading system. For our examples we will combine it with:
- RSI
- MACD
- Moving Averages XAUUSD Trading Technical Indicator
Example 1: Gold Stochastic System
Sell Gold Trading Signal Generated using Stochastic System
From our gold trading system the sell xauusd trade signal is generated when:
- Both Moving Averages are moving down
- RSI is below 50
- Stochastic moving downward
- MACD heading downwards below centerline
Sell trading signal was generated when all these gold trading rules were met. The exit gold signal is generated when a signal in opposite direction is generated i.e. When the gold indicators reverse.
Good thing about using such a xauusd system is that we are using different types of gold indicators to confirm the trade signals & avoid as many gold trading whip-saws as possible in process.
- Stochastic - is a momentum oscillator xauusd technical technical indicator
- RSI- is a momentum oscillator xauusd technical technical indicator
- Moving Averages Gold Trading Technical Indicator- is a gold trend following xauusd technical technical indicator
- MACD- is a gold trend following xauusd technical technical indicator
It is very helpful to combine more than one gold indicator, as a combination of gold trading signals is better than relying on just a single gold indicator. The xauusd technical trading indicator combinations reinforce each other, and cancel out false whipsaw xauusd trade signals.
A gold trend following technical indicator helps a trader to see the overall picture, while using more than one momentum gold technical indicator gives better & more reliable entry and exit points for trading gold.
The gold indicators combinations & their gold trading signals help to decipher a lot of the xauusd market activity.
Example 2: Gold Stochastic System
Buy Gold Trading Signal Generated using Gold Stochastic System
For this example the gold trend is clearly upward, but at some point there were a few gold trading whipsaws generated by the stochastic oscillator gold indicator, can you identify them? - So the question is how can a trader avoid trading these gold trading whipsaws?
Well, the answer is that by looking at the other technical gold indicators such as MACD indicator a trader could have avoided the whip saw, even the MACD technical indicator had not given a crossover gold trading signal although it was very close to the zero center line level, at the same time the gradient at which the moving averages technical indicators turned was not so sharp as to warrant a decisive gold market trend reversal. Well the thing is that it’s not so obvious when it comes to recognizing gold market whipsaws: it's a skill that takes some time but after some time you can spot whipsaws from a mile away.
One tip is that as long as MACD indicator is above zero center-line even if the MACD lines are heading downwards then the trend is still upwards. As you can see from the above example MACD indicator never went below zero line and afterwards the upward trend continued with the MACD xauusd technical technical indicator maintaining above Zero line & continuing to move upward.
During ranging gold markets Stochastic Oscillator indicator will give the fastest gold trading signals which are prone to whipsaws. This is why stochastic oscillator indicator is best combined with other indicators & the gold trading signals traded are confirmed by another one or two other Gold indicators.
