42: This Stochastics Tweak Was The Difference Between Making Or Losing Money

The Option Alpha Podcast

Kirk Du Plessis

Education, Options Trading, Trading, Investing, Stock Market, Business, Finance

4.8 • 1.2K Ratings

🗓️ 22 January 2016

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

Show Notes: http://optionalpha.com/show42 The Stochastics indicator has long been a favorite for investors and could arguably be one of the most popular technical analysis indicators. Today I’m going to show you the results of our backtesting analysis on the Stochastics Indicator and I think you’ll find it extremely useful wWhether you’ve used it before to trade or if this is your first time looking it up. Now, unlike the results we saw in Show 41 of the podcast, today’s mini-case study...

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0:00.0	You're listening to the Option Alpha Podcast from Option Alpha.com where we show you how to
0:06.2	make smarter trades learn how the stock market really works and generate consistent
0:10.8	monthly income. Now your host and head trader at
0:15.0	option alpha.com Kirk depluses.
0:20.0	What's up everyone? This is Kirk here again from option alpha
0:22.8	com working every single week to make this the most popular
0:25.9	investing podcast offered in iTunes and online because it's based on one thing
0:30.5	and one thing only and that's helping you make smarter trades.
0:33.7	So thanks for tuning in today.
0:35.0	We've got a really cool show as always talking about stochastics and this is arguably one of the
0:40.8	most popular indicators out there. I think there's a couple that really kind of take the top slots, but I would argue that stochastics is one of those. In fact, you hear it all the time on media outlets, blog posts in social circles for traders and
0:56.8	even some you know punents on TV talk sometimes about stochastics and it's kind
1:01.4	of implementation in the market as a technical indicator.
1:04.0	But what we're going to see here today is that there's a simple tweak that you can make
1:08.8	to stochastics that really is the difference between making or losing money long term with this indicator and again very simple tweak but our back testing research has really confirmed this little you know change that you can make to how you use stochastics and the profitability
1:25.1	that you might see with that indicator as a result. Now in my opinion like I
1:29.9	said I think it's one of the most popular indicators there's almost 15 million searches
1:34.4	every single month for stochastics in Google and today unlike what we saw in
1:39.9	show 41 where we talked about the absolute price oscillator, today's mini case study you're
1:45.6	going to see a positive correlation between the win rate and the overall net profit.
1:51.0	So APO actually showed in the last podcast that we did, Show41. that didn't make enough money on the winners to overcome the losers.
2:03.0	Well in today's show when we look at stochastics and if you take a look at the show notes page
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