#4 ) Spread Betting with the Stochastic Oscillator

Many of you have asked yourself how to use the stochastic in spread betting?

The stochastic is an oscillator and shows you when the markets are overbought or oversold. Spread Betting Systems which adopt a Stochastic indicator for monitoring the price provide some very good tips about the situation of the market.

Scalpers can use the more sensitive settings 5,3,3.

Entry rules: Go long when the Stochastic has crossed below 20,  and then crossed back up through 20.
Go Short when Stochastic has crossed above 80, and then crossed back down below the 80.

Exit rules: close trade when Stochastic lines reach the opposite lines (80 for Buy order, 20 for shorts).

Advantages: gives quite accurate entry/exit signals in well trending market.

Disadvantages: You need to monito this periodically, as when markets trend the stochastic’ 20 – 80 range  could change to 30-90

I have used this on my Igindex for commodity trading as commodities often change direction adruptly.