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Often I've notice Stochastics doesn't enter the oversold/ overbought and reverses to opposite direction. I understand while trending or while strength is on one side stochastics tend to reverses in mid-way. But during side-way and that too in squeezed market (high/low difference is very minuscule) or flat market, Stochastics just move between 80-20 region and fails to position itself on either side. I've tried all possible combination incearease the K%, worked with different time frames like 1 min, 5 min, 15 min, 60 min, daily. But none actually is working. Can anybody please help me understand this concept.

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    What instrument are you using it on? Is it a stock, an Index or something else? Have you tried it on a different instrument? – Victor Oct 13 '15 at 13:14
  • I've used it on both stock as well as index. Infact i tried it even on commodity. Right now I'm daytrading in index (Nifty). And this problem (sideways movement) is making it very difficult as I trade index options. so if the broader index is narrow rangebound and also sudden accumulation/distribution pattern is formed, it is destroying my option trades and overall fund is deteriorating. I do use other indicator Bolinger Band,RSI, PSAR and ADX to support decision. But overall it become too much confusion. So trying to improvise Stochastic for more accuracy. – Pravin Wagh Oct 14 '15 at 16:46
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You might be seeing other traders reacting on the expectation you are trying to observe, introducing secondary movements. Really this stuff is pretty random.

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Try to change the period of the stochastic. If you are using 14 days, then try 13 or 12 or 9, whatever. Are you using fast or slow stochastics? Try the other one.

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It is possible that the current market conditions you were looking at, there were no signals for you to act on. I see in your comment you are trading some very short time frames, which I am unfamiliar with, but I expect that my 1-6 month time frame logic is applicable to your much quicker time frame.

Sometimes your method of technical analysis will indicate that you shouldn't be in the market and that there are no valid buy signals. This is fine. You don't want to tweak your trading methodology to enable you to trade, as that will more than likely mean you end up making poor quality trades with a higher risk.

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