The Stochastic Oscillator foreign exchange trading strategy is an appealing system with a fairly low fall rate. It is established on a standard Stochastic Oscillator indicator, which signals a trend weakness and adjustment. This means that you will most constantly enter on pull-backs, assuring fairly secure stop-loss levels.


  1. Easy to follow.
  2. One and only standard indicators utilized.
  3. Secure stop-loss levels.
  4. Take-gain level isn’t excellent.

The Strategy Establishment

  1. All currency pair and lapse of time should work. But longer time spans are recommended.
  2. Include a Stochastic Oscillator indicator to the diagram; establish its %K time span to 14, %D time span to 7 and slowing to 7, utilize plain MA method.

The Entry Conditions

Introduce long positions when the cyan line bypasses the red one beneath and the pairs are positioned in the lowest partial of the indicator’s window.

Introduce short positions when the cyan line bypasses the red one from above and the pairs are positioned in the uppermost partial of the indicator’s windows.

The Exit Conditions

Establish stop-loss to the local maximum if moving long and to the local minimum if moving short.

The most satisfying level for take-gain is in the midst of 1 * SL and 1.5 * SL.

Close position at once if another signal is created.



Five signals for this strategy can be noticed on the instance diagram above. All stop-loss levels are highlighted with the yellow horizontal lines one the diagram. The initial signal is for short position with a close stop-loss; take-gain is attainable here. The second one is a vigorous signal, which shifts out to be a mistaken pull-back, luckily enough; the stop-loss is completely tight here. The third signal is actually not a signal, since it is a bluff figure cross that emerges in the lower half of the window and hence is neglected. The fourth signal is vigorous with a stop-loss entirely far and away, but even the most contentious take-gain level would work here. The closing signal is for short, with solid stop-loss and a moderately beneficial TP setting.

Ideally the vigorous and bluff signals should follow each other, but due to the existence of the false signals (bluff in the lower half and vigorous in the upper half of the window), it is not perpetually the case.

Danger-SignUtilize this strategy at your own risk. 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.



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Mike N
Mike N

Financial Trading Systems Design Expert

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