The combined Stochastic Oscillator/MA foreign exchange trading strategy is a comparatively secure trading system that is established on the standard Stochastic Oscillator signal in consolidation with the standard Exponential Averages. You can utilize the moving averages as the common long-term trend signal, while the stochastic will display you the short-term oversold/overbought events, where you can begin a profitable pull-back exchange.
- Fairly reliable.
- Exchanging with the trend.
- It is not simple to follow.
- No precise target/exit levels.
The Strategy Establishment
- All currency pair should work. Utilize D1 time period for the long-term exposure with the Exponential moving Averages and H1 time period for the short-term indicator acquiring with the Stochastic Oscillator.
- Include 3 Exponential moving averages to the D1 diagram, establish periods to 50, 100 and 200 respectively.
- Include a Stochastic Oscillator signal to the H1 diagram, establish its %k timeframe to 14, D% timeframe to 3 and reducing to 3, utilize Close/close cost field, establish overbought aligned to 90% and oversold aligned to 10%.
The Entry Conditions
Begin long position when the long-term trend is vigorous (the D1 diagram displays price above EMA50, EMA50 above EMA100 and EMA100 above EMA200) and the stochastic bypasses the oversold aligned from beneath on H1 diagram.
Begin short position when the short-term occurrence is bluff (the D1diagram displays price beneath EMA50, EMA50 beneath EMA100 and EMA100 beneath EMA200) and the stochastic bypasses the overbought aligned from above on H1 diagram.
The Exit Conditions
There are no precise SL/TP alignments, but the suggested reward/risk proportion is 1/2.
A fairly tight tracking stop should be managed.
On the instance diagrams above you can notice the December 14, 2009, indicators created both for the vigorous EUR/AUD and for the bluff AUD/CHF diagrams. As you notice, the indicator line for stochastic oscillator is the real stochastic, not its MA. The exponential moving averages should create a very nearly superlative trend for more definite indicators. In the short positions would hit a fairly assured take-gain. In the long position instance the second exchange would confine with almost no failure if a strong trailing stop was utilized.
Utilize this strategy at your own risk. WindsorForex.com can’t be responsible for any losses associated with using any strategy presented on the site. It’s not recommended to use this strategy on the real account without testing it on demo first.