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Chart 1 - Template 1 - DoubleStoc10 Oscillator with Mechanical Buy/Sell Signals
The Double Stochastic oscillator (DBS10) is a powerful trading tool and trend indicator that generates high-probability Mechanical Buy/Sell Signals that also serve as identifiers of cycle bottoms and tops. The accuracy factor of the Bressert DoubleStoc10 Buy and Sell Signals is approximately 70%.

Chart 1 shows Template 1 with a name that explains what it is.

_1 WB DBS10 B-S SIG

DBS stands for DoubleStoc oscillator
10 is the length of the oscillator
B-S is a Buy/Sell Signal

This chart of the S&P500 has a 20-day trading cycle, and it could be any time frame of any market. Cycles of all time frames have similar characteristics, and move in such a manner that cycle bottoms and tops can be identified by the powerful ProfitTrader oscillators, Mechanical Buy/Sell Signals, Trading Signal combinations, and Timing Bands.

The blue DBS10 oscillator plotted in Window 3 at the bottom of the chart tends to get overbought at cycle highs and oversold at cycle lows. The oscillator is a stochastic of a stochastic, with another twist or two. It is smooth enough to generate Mechanical Buy and Bell Signals at cycle tops and bottoms.

 

 
   

Window 1 shows the daily price bars. The blue diamonds show 20-day trading cycle bottoms that tend to occur as the DBS10 oscillator makes an oscillator bottom. The red diamonds show the 20-day cycle tops.Window 2 shows the Mechanical Buy and Sell Signal Setups. A red down-spike identifies the price bar for a Sell Setup, and a green up-spike identifies the price bar for a Buy Setup.

Compare the oscillator highs and lows with the cycle bottoms (blue diamonds), and tops (red diamonds). The correlation of the oscillator tops and bottoms with the price cycle tops and bottoms is very high, allowing the oscillator to be used to generate high probability Mechanical Buy and Sell Signals.

A Buy/Sell Setup is NOT a Buy/Sell Signal until it is entered by a rise above the high of the Buy Setup Bar, or a drop below the Sell Setup Bar. Buy/Sell Signals should be taken in the direction of trend, and at trend reversals. Ignore the signals against the trend.

The vertical green line identifies a Buy Setup Bar generated by an upturn of the blue DBS10 oscillator. It is a Mechanical Buy Signal, and a buy stop to go long should be placed above the high of the setup price bar indicated by the green line - 1 tick to a point, or more, depending upon the market and time frame your are trading.

The vertical red line identifies a Sell Setup Bar generated by a downturn of the blue DBS10 oscillator, and a sell stop to go short should be placed below the downturn Sell Setup Bar indicated by the red line, 1 tick to a point, or more, depending upon the market and time frame your are trading.

The Mechanical Buy Signals for the DoubleStoc10 are generated by a drop below the lower horizontal blue line, called the Buy Line, which is set at 40, and an upturn in the oscillator.

It is a 3-step process.

  1. The DoubleStoc oscillator drops below the Buy Line;
  2. The oscillator turns up to identify a BUY Setup Bar with a green up-spike;
  3. Buy the high of the Setup Bar with a buy stop 1 tick to a point above it.
Buy Signals should only be taken in the direction of trend and/or at trend reversals.

The Sell Signals are formed in a similar 3-step process.

  1. The DoubleStoc oscillator rises above the Sell Line;
  2. The oscillator turns down to identify a SELL Setup Bar with a red down-spike;
  3. Sell the low of the Setup Bar with a sell stop 1 tick to a point below it
Sell Signals should only be taken in the direction of trend and/or at trend reversals.

Protective Stop
The Buy and Bell Signals follow cycle tops and bottoms, so the Protective Stops are placed 1 tick to a point or more below the apparent cycle low for a Buy Signal; and 1 tick to a point, or more, above the apparent cycle high for a Sell Signal. With Protective Stops you are always in "control" of your dollar risk.

Next: DBS5 Oscillator With Mechanical Buy/Sell Signals
The Bressert DoubleStoc 5 tends to show the smaller cycles and generates Buy and Sell Signals that are up to 90% accurate for the shorter-term cycles. It also interacts with the DoubleStoc10 to form Buy and Sell Patterns