Definition and how it works-
This Stratergy is used only with a single indicator called stochastic and the stratergy is called "stochastic pop" because it tells the trader to enter the markets when most traders consider that the market is oversold or overbought.In simpler words Stochastic Pop tells to buy when most people think it is overbought and will not go higher anymore or vice versa.As we have seen in history there is no limit to how high prices can go.Therefore, Stochastic Pop uses the momentum of the market to its advantage by buying when the momentum is strong and selling when the momentum is weak in the expectation that the move will continue long enough to yield some profit.Frequently, the period of greatest upside momentum over the shortest period of time occurs after a market has become overbought and vice versa.Stochastic POP capitalizes on these conditions.
Stochastic POP parameters-
Rules of the applications for us Stochastic POP, use a 14-period slow stochastic indicator, a buy signal is there when percent K is at 75 percent or higher at the end of the period you are using the opposite applies when you want to sell, for day trading purposes you should use either 5 minute or 15 minute time frame chart you can apply stop loss and take profit by using money management techniques and you have to exit the market as soon as percent K and percent D have crossed one another at the end of your 5 minute or 15 minute time frame chart.Please refer to a graph while studying or using this stratergy.
