Premier Stochastic Oscillator (PSO) [andre_007]

This is a improved version of Premier Stochastic Oscillator (PSO), coded by "LazyBear".

"The indicator was first introduced by technical analyst Lee Leibfarth in the August 2008 issue of the journal Technical Analysis of Stocks & Commodities".

Inprovements:

• The script was update to version 4 of PineScript.
  
• Added support for diferents times frames.
  
• For example, now it's possible to stay in intraday and at same time see a weekly version of this indicator.
  
• Possibility to customize the thresholds.
  

Introduction to indicator:

"Stochastic oscillators have long been used to help traders and investors identify areas where trend changes are likely.
Leibfarth developed the PSO to take advantage of a standard stochastic oscillator's strengths while enhancing it to become more reactive to market activity.
The result is a faster indicator that provides earlier signals for potential trend changes".

More info:
www.investopedia.com...llator_explained.asp

發布通知:

New version with some corrections and improvements.

• Added legends to lines
  
• Added overbought and oversold colored zones
  
• Changed default colors for easier viewing
  

發布通知:

I've implemented some fine tuning for visibility.
When the indicator is in the 'overbought' or 'oversold' areas, the color will be highlighted.

Furthermore, I think I owed the more detailed description of how to use this indicator.
Then move on.

What to look for:

According to Lee Leibfarth's paper:
" the PSO is best suited for trading changes in market direction (countertrend trading)

The thresholds are defined by horizontal lines at +/-0.20 and +/-0.90.
These thresholds create two symmetric buy and sell areas with the following rules:

• Long trades: (1) Premier stochastic crosses below 0.90, (2) premier stochastic crosses below 0.20
  
• Short trades: (1) Premier stochastic crosses above -0.90, (2) premier stochastic crosses above -0.20~
  

"

However, we can adapt this indicator to our own trading system, and nothing prevents us from using a trend movement, instead of counter-trend mentioned by the author.
It is noteworthy that the probability of winning increases if we use this indicator in conjunction with other tools, such as using a longer timeframe in parallel along with a price-action analysis.