Trading Strategies

Stochastic Combination of Strategy | Forex Trading Strategies

10

Stochastic Combination of Strategy | Forex Trading Strategies

Stochastic combination of strategy- is a relatively secure system that is based on the standard Stochastic Oscillator indicator in combination with exponential moving averages. You can use moving averages as the general indicator of the long – term trend, while the stochastic will show you the overbought / oversold in the short term, where you can enter the position of pull-back success.

Characteristics of this Forex Trading Strategies

  1. Quite reliable.
  2. It operates with the trend.
  3. It is not very easy to follow.
  4. No definitive target levels in / out.

Strategy Set

  1. Any currency pair can work. Use the period D1 for detecting the long-term trend exponential moving averages and the signal H1 period for short-term Stochastic Oscillator.
  2. Add all 3 Exponential moving averages to graph D1, set periods to 50, 100 and 200.
  3. Add the Stochastic Oscillator indicator to the H1 chart, set its period% K to 14, period% D 3 and deceleration to 3, use levels Close / Close (Closed / Closed), set the overbought level at 90% and oversold to 10%.

Entry conditions

Enter Long position when the long-term trend is bullish (D1 chart shows the top price MME50, MME50 than MME100 and MME100 than MME200) and the stochastic crosses oversold level from below on the H1 chart. Enter Short position when the long-term trend is bearish (the D1 chart shows the price below MME50, MME50 less than MME100 and MME100 less than MME200) and the stochastic crosses the overbought level from above on the H1 chart.

Exit conditions

No definitive levels SL / TP, but the recommended ratio risk / reward ratio is 1: 2. A very small trailing stop should be maintained.

Examples

downtrend

Stochastic Combination of Strategy | Forex Trading Strategies

downtrend

Stochastic Combination of Strategy | Forex Trading Strategies

In the example graphs you can see the signs of December 14, 2009 generated for the bearish chart EUR / AUD and the bullish chart AUD / CHF. As you see, the signal line for Stochastic Oscillator is the current stochastic, not his MM. Exponential moving averages should form an almost perfect trend for more accurate signals. In the example of the short position can achieve a take-profit quite optimistic. In the example of the long position the second operation may end almost without loss if the trailing stop small it is used.

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Saimon Akash

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