Drake Delay is the modified version of the traditional Stochastics indicator and talks about overbought and oversold levels. This guide will talk about how the indicator works and how you can apply it as a strategy.
What is Drake Delay Stochastics?
When you apply the Drake Delay Stochastics indicator, it looks like standard Stochastics; however, there is a difference.
The Drake Delay adds a time delay when plotting the lines. Time delay means that the indicator doesn’t move along with the price; rather, it adds a delay. The delay helps filter false signals and gives you a clear picture of the trend’s direction.
Like other oscillators, the indicator oscillates between 0 and 100.
When the signal line and the Drake Delay line reach near 100, it’s an overbought level. Conversely, if the lines reach neat 0, we have an oversold condition.
The overbought and oversold levels are the essence of Drake Dealy, and that’s how we take our positions with the indicator.
Drake Delay Stochastics Strategy
Trading with the Drake Delay isn’t complicated. You have to locate the indicator’s lines. If the indicator is at the 100 level, it signifies an overbought condition, and you can enter short positions or exit the long ones.
On the other hand, if the indicator reaches near the 0 level, it’s a sign that the bearish trend is about to end. So, you can take long positions or exit the short ones.
Although Drake Delay Stochastics works well, adding another indicator like the Moving Averages is better for further signal confirmation.
The good thing is Drake Delay works on every timeframe. However, when you apply the indicator on longer timeframes, it produces fewer false signals.
Buy Signal
- The Drake line and the signal line should reach near 0.
- Wait for the price to go upwards, then enter the trade.
- You could place a stop-loss near the recent low.
- You could set take-profit at the recent high or exit the trade when the Drake Delay reaches near 100.
Sell Signal
- The Drake line and the signal line should reach near 100.
- Wait for the price to go downwards, then enter the trade.
- You could place a stop-loss near the recent high.
- You could set take-profit at the recent low or exit the trade when the Drake Delay reaches near 0.
Drake Delay Stochastics Pros & Cons
Like many other indicators, Drake Delay has its pros and cons. Let’s find out if the pros outweigh the cons.
Pros
- Drake Delay mentions clear entry and exit signals.
- The indicator is simple to understand.
- You can add the indicator as a confluence in other strategies.
Cons
- Sometimes the indicator can produce false signals.
- Needs good forex money management.
Conclusion
The Drake Delay Stochastics indicator adds a time delay on the signal line and the indicator line to mention the overbought and oversold levels. It gives a clear picture of where the trend is heading. You can always practice trading on a forex demo account to begin with to improve your trading skills and build up your confidence.
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