2. Adding the indicator
- We add the Slow Stochastics as the indicator. The Slow Stochastics is an oscillator which provides oversold or overbought signals.
- When the market is overbought, a downward movement is expected.
- When the market is oversold, an upward movement is expected.
- In this scenario the Slow Stochastics opens and closes the position. As each indicator is lagging, the indicator opens a position a bit too late and closes it also a bit too late. Hence the Equity curve is showing a negative result.
