When the trend was identified on the M30 chart, we switch to the M5 chart — where we receive a signal to go short. Depicted: Admirals MetaTrader 5 — GBPUSD M5 Chart. Whether you are a beginner or an experienced trader, a risk-free demo account from Admirals is the perfect place for you to test out a Stochastic Oscillator trading strategy from this article! Practice trading with virtual currency in real-market conditions before risking your capital on the live markets.

In order to open your free demo account today, click the banner below:. Generally, the zone above 80 indicates an overbought region, and the zone below 20 is considered an oversold region. A crossover signal occurs when both Stochastic lines cross in the overbought or oversold region. An overbought sell signal is given when the oscillator is above 80, and the solid blue line crosses the red dotted line, while still above Conversely, an oversold buy signal is given when the oscillator is below 20, and the solid blue line crosses the dotted red line, while still below The higher the time frame the better, but usually a H4 or a Daily chart is the optimum for day traders and swing traders.

Depicted: Admirals MetaTrader 5 — EURUSD Daily Chart. Date Range: 19 November — 17 June This is a swing trading strategy and suitable for part-time traders and traders who don't like to sit watching charts all day.

It is traded on a daily time frame. In order to enter long or short positions, the following criteria must be met:. Targets are daily pivot points shown by the Admiral Pivot indicator. Traders can also opt to use a trailing stop. For uptrends, a trailing stop is activated for the first time when the Stochastic reaches For downtrends, a trailing stop is activated when the Stochastic reaches For starters, traders can move trailing stops in the following way:.

A Stop-loss is placed just above the most recent swing high for short entries and just below the most recent swing low for long entries. Date Range: 24 April — 17 June Past performance is not a reliable indicator of future performance.

Depicted: Admirals MetaTrader 5 — USDJPY Daily Chart. You should now be more familiar with the Stochastic Oscillator and understand why it is such a popular indicator in Forex trading. The Stochastic Oscillator trading strategies that we have explored above can also be a unique way to look into the markets.

The Stochastic indicator works best when using the standard indicator that you can find on both the MT4 and MT5 platforms. Some custom-made Stochastic indicators may cause slowdowns, and may even use different formulas. Before trying any of these trading strategies on the live markets, it is highly recommended that you open a demo trading account in order to practice in a risk-free environment.

If you are feeling inspired and ready to start trading Forex on the live markets, the Trade. MT5 account from Admirals is the perfect place to do so!

With Admirals, you can trade Forex CFDs on over 40 currency pairs, 24 hours a day, 5 days a week! In order to register for an account today, click the banner below:.

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8, financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5.

Start trading today! This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

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by TradingStrategyGuides Last updated Jun 28, All Strategies , Indicator Strategies 37 comments. As the name suggests, this is a stochastic strategy suitable for day traders. The stochastic strategy is much the same as the Day Trading Price Action - Simple Price Action Strategy. The only difference this time around is that we incorporate a technical indicator into this strategy. Namely, the stochastic indicator. This is the best Stochastic trading strategy because you can identify market turning points with accurate precision.

This can turn you into a modern sniper elite trader. The Stochastic indicator will only make you pull the trigger at the right time. A modern sniper elite trader only pulls the trigger on a trade when he is certain he can pull a winning trade. Our team at Trading Strategy Guides is developing the most comprehensive library of Forex trading strategies. Our goal is to help turn your trading around. Our favorite time frame for the Best Stochastic Trading Strategy is the minute chart.

This is because we have taken the time to backtest the best Stochastic Trading Strategy. We also tested the minute TF over and over again. The stochastic strategy evolved into being one of the best stochastic strategies.

Despite the stochastic indicator being a very popular indicator among traders, they have been using it the wrong way. Our team at Trading Strategy Guides. com interprets the charts and the indicators in an unorthodox way.

We have your back. Our favorite MACD Trend Following Strategy is the best trend following strategy. For every Forex strategy, we make sure we leave our own signature and make it simply the best. You can also read our best Gann Fan Trading Strategy. Before we move forward, we must define the indicators you need for day trading with the best Stochastic Trading Strategy and how to use stochastic indicator. Stochastic Indicator: This technical indicator was developed by George Lane more than 50 years ago.

There is a reason why this oscillator survived for so many years. The Stochastic indicator is a momentum indicator that shows you how strong or weak the current trend is. It helps you identify overbought and oversold market conditions within a trend. The stochastic indicator should be easily located on most trading platforms. Indicators, like the MACD indicator, are more suitable for swing trading.

You should really check out our amazing MACD Trend Following Strategy. We decided to share this with our trading community recently. Another reputable oscillator is the RSI indicator, which is similar to the Stochastic indicator. We chose it over the RSI indicator because the Stochastic indicator puts more weight on the closing price. This is the most important price no matter what market you trade.

This strategy can also be used to day trade stochastics with a high level of accuracy. The stochastic oscillator uses a quite complex mathematical formula to calculate simple moving averages:.

The mathematical formula behind this method works on the assumption that the closing prices are more important in predicting oversold and overbought conditions in the market. Based on this assumption the Stochastic indicator works to give you the best trade signals you can possibly find. Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules. This is a crucial part of the strategy because we only want to be trading in the direction of the higher time frame trend.

com has put a great deal of time into developing the best guide to Trading Multiple Time Frames - The Key to Successful Trading. The multiple time frame concept is important because it can give you a more robust reading of the current price action and more it can help you better time your entry and exit points.

The minute chart is the best time frame for day trading because is not too fast and at the same time not too slow. It is said that the market can stay in overbought and oversold condition longer than a trader can stay solvent. So we want to take precautionary measures, and this brings us to the next step on how to use the stochastic indicator.

Right now is the time you should switch your focus to the price action, which brings us to the next step of the best stochastic trading strategy. A Swing Low Pattern is a 3 bar pattern and is defined as a bar that has one preceding and one following bar with a higher low.

Here is how to identify the right swing to boost your profit. So, after following the rules of the Best Stochastic Trading Strategy , a buy signal is only triggered once a breakout of the Swing Low Patterns occurs.

You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5 pips away from the low, to protect yourself from possible false breakouts.

Knowing when to take profit is as important as knowing when to enter a trade. The Best Stochastic Trading Strategy uses a static take profit, which is two times the amount of your stop loss. Day trading with the Best Stochastic Trading Strategy is the perfect combination between how to correctly use stochastic indicator and price action. The success of the Best Stochastic Trading Strategy is derived from knowing to read a technical indicator correctly and at the same time make use of the price action as well.

We also have training for the best short-term trading strategy. Please leave a comment below if you have any questions about the Stochastic Trading Strategy! Please Share this Trading Strategy Below and keep it for your own personal use! Thanks Traders! We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

I found it easier to understand this Stochastic explanation and I will put into practice when the markets open, to check my understanding. Hi Very very good , thank you so much. Can I have the settings for 5 minutes timeframe intraday trade please. very interesting strategy however it does not explain the possible difference in the chart structures of timeframes i. Super easy strategy. One question.

Do you get out of the trade once the k and d have crossed over the 80 level? I am beginner. I like the way you explain its. Would love it if you can produce pdf for me so that i can print.

Thank you very much.. warm regards. Appreciate this is an old thread but I have just been backtesting and have a question if that's OK. I have found several instances when having identified the correct setup on the daily, I look at the 15 minute and the stchastic is between the bands.

For example for a short trade are you saying that if the 15 min stochastic is between the bands after checking the setup on the daily then it is best to wait for the stoch to break into overbought, cross and return to the 80 level level before looking for the swing high.

Not sure i have explained all that well but hope you know what I mean lol I think that the settings should be default with this strategy! The NT8 version may look a bit different. I am also a big fan of the Stochastic indicator but I like to use a faster setting, this is.

Thanks for the feedback. All traders are different so that is perfect if you have had success using those settings. Can we use it on the 1 hour chart? I like the 1 hour chart because one can day trade and swing trade with it, plus one doesn't have to stare at the charts multiple times during the day. Thanks for this great strategy,Just want to find out if this stochastic settings will work 14,3,2? Thanks for the tweaking of an already great indicator! Couple of questions: 1 Article says to use Default settings of 14,3,3 but in the example box it says 14,3,1 - not a great difference but I want to be sure of the right settings.

Do you have or know of a 3-Bar Fractal Indicator that will mark this pattern like the standard 5-Bar Fractal Indicator? I have found only one on line and it was quite expensive to purchase I am too cheap. That is a really good question perhaps we could ask TSG to see if they would make one because they really make great indicators.

To answer your first questions, yes the defaults are 14,3,1. png See attached Pic of this Second, great idea! We have many new indicator ideas currently and we can add this to our list. Its traders like you who keep us motivated to help. Thanks for sharing your idea. Thank you for this strategy 🙂 I like it because stochastic is my favorite indicator and I cant wait to test it.

However,I would like to hear your opinion about implementing this strategy in binary options. Since things are a bit different in binaries, what you think about expiration time?

Password recovery. Its traders like you who keep us motivated to help. To do this, we will be using the 50 period Exponential Moving Average EMA. Lane also reveals in interviews that, as a rule, the momentum or speed of the price of a stock changes before the price changes itself. I like the 1 hour chart because one can day trade and swing trade with it, plus one doesn't have to stare at the charts multiple times during the day. LEAVE A REPLY Cancel reply. Investopedia does not provide tax, investment, or financial services and advice.

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