Both The RSI And Stochastic Can Help You Create Profitable Short Term Stock Trading Strategies
I typically receive dozens of emails from traders who are just starting out asking me for help in creating short-term stock trading strategies.
A few weeks ago I demonstrated a strategy using the RSI indicator; I received several emails from readers asking me to explain the difference between the RSI Indicator and the Stochastic Indicator.
Without getting into complex mathematical formulas, the RSI indicator measures the momentum or velocity of price movement or in plain English the RSI indicator measures when prices moved too fast too soon.
The Stochastic Indicator, on the other hand, is a measurement of the placement of a current price within a recent trading range.
The theory is that as prices rise, closes tend to occur nearer to the high end of their recent range. Conversely, when prices drop, closes tend to be near the low end of the range. This is how the Stochastic Oscillator measures price levels.
Both indicators are considered momentum oscillators because their primary role in most short-term stock trading strategies is to locate overbought and oversold market conditions.
Read the full article on MarketGeeks by Roger Scott+ on May 9, 2017