Indicators are often considered to be the best way to filter the quality trades. But the majority of the novice traders consider indicators as the prime ingredient to trade the live assets. They simply install many different indicators at their trading chart to filter the best trading signals. But by doing so they are messing up their trading charts. You need to trade the market with a clean chart so that you can easily understand the price movement of the different currency pairs. In fact, some professional traders often ignore the indicators tend to trade with price action confirmation signal. But in this article, we will discuss how to use the stochastic indicators to execute the high-quality trades in favor of the market trend.

What is a stochastic indicator?
Stochastic indicator is a leading indicator and it helps the traders to find the overbought and oversold conditions of the currency pairs. For instance, if the value of the stochastic indicators stays above the 80 mark then we can assume that the pair is in an overbought condition and at any time the price of that asset might drop. On the contrary, if the stochastic reading stays below the 20 market then we can assume that itís in an oversold condition and the price of the currency pair is most like to go up. But when you use this indicator you can always alter the value of the period to adjust the reading to your trading system. But before you tweak the value make sure that you use your demo account to see how the new value of the indicators works.

Resistance level trading
In order to trade the key resistance level, you need an overbought reading in the stochastic indicator. But before that, you need to find the existing trend of the market using the daily or weekly chart. The prevailing trend must be bearish when you look for potential short trading opportunity. Once the price hits the critical resistance level wait for the bearish price action confirmation signal to execute your orders in your online trading account. But make sure that the stochastic reading is above the 80 market.

Support level trading
Support level trading is very much similar to resistance level trading. You need to find a bullish trend and wait for the oversold condition of the stochastic indicator. Once the trading parameters are full filled execute your long orders with the bullish price action confirmation signal.

Price action confirmation signal
Trading the key support and resistance level with the stochastic indicator reading is very profitable. But if we donít use any price action confirmation signal then we will have to use a wide stop loss in our trade execution. For this reason, the professional traders always use the price action confirmation signal to place their trade in favor of the long term trend. But when you place your trade make sure that you have calculated your lot size according to your stop loss level. Never take any risk which will affect your emotion. Being a new trader itís always better to limit your risk exposure below the traditional 2% amount. Itís true that if you want to trade the stochastic indicator with a high level of success then you will have to learn about the Japanese candlestick pattern. The initial part of price action trading is a little bit complex but once you learn all the basic candlestick pattern everything will be crystal clear to you.

Support and resistance levels are often broken in the market. Even the long term prevailing trend often gets changed. So how do we protect yourself from the trend reversal? You need to learn about the fundamental analysis since it is one of the best ways to assess the strength of the prevailing trend in any currency pair. Always keep yourself informed with the latest market news so that you can prepare yourself for high market volatility.