How to use stochastic oscillator in forex

How to use stochastic oscillator in forexHow to Use Stochastic Oscillator in Forex

The Stochastic Oscillator was created by George C. Lane and introduced to the trading community in the late 1950s. It was one of the first technical indicators used by analysts to provide insight into potential future market direction and is based on the premise that during a market uptrend, prices will remain equal to or above the previous period closing price. Alternatively, in a market downtrend, prices will likely remain equal to or below the previous closing price.

Using a scale to measure the degree of change between prices from one closing period to the next, the Stochastic Oscillator attempts to predict the probability for the continuation of the current direction trend. Traders look for signals generated by the actions of the stochastic lines as viewed on the stochastic scale.

Stochastic - A Greek word meaning "guess" or "random" that in this context, refers to the task of predicting a future state based on past actions.

Forex scalping strategy with stochastic oscillator

Forex scalping strategy with stochastic oscillatorForex Scalping Strategy With Stochastic Oscillator

High frequency scalping with the Stochastic trading oscillator. This strategy provides you with several trading opportunities every day. Were looking for a modest 10 pips price objective. Find the complete trading set up outlined below. Please feel free to experiment with the different settings.

Scalping Setup

Indicators: Stochastic Oscillator with default settings, Fisher indicator

Preferred time frame(s): 1 min

Preferred Currency pairs: Low spread pairs (EUR/USD, GBP/USD, USD/JPY, AUD/USD,) with medium to high volatility.

EUR/USD 1 Min Chart

As shown in the EUR/USD chart above, the strategy provides us with 5 valid buy trading signals in just 2 trading hours during the Asian session. Three trades already closed for the 10 pips each (30 pips total). Two trades remain open until target is reached (or stop hit).

Trading Rules

Fisher indicator green bar

Stochastic oscillator (5,3,3) reaches 80 level

Execute long trade! Place 10 pip stop loss (or below previous swing low) and exit the trade for 10 pips profit.

Go short now! Place 10 pip stop loss (or above previous swing high) and exit the trade for 10 pips profit.

GD Star Rating

Three trading strategies for the stochastic oscillator

Three trading strategies for the stochastic oscillatorThree trading strategies for the Stochastic Oscillator

This is a guest post by Marcus Holland, editor of FinancialTrading

The stochastic oscillator is a momentum indicator developed by George Lane during the 1950’s. The indicator is used to follow momentum as it captures the closing price relative to the high-low range of an asset. The stochastic oscillator follows the rate of change of prices, and does not incorporate volume as part of its formula. The stochastic oscillator is used to find increasing momentum, as an overbought and oversold indicator, as well as to find divergences as momentum generally changes before changes in prices occur.

*The formula for the stochastic oscillator is:

“%K = (Current Close Lowest Low)/ (Highest High Lowest Low) * 100

%D = 3-day SMA of %K

Lowest Low = lowest low for the look-back period

Highest High = highest high for the look-back period

%K is multiplied by 100 to move the decimal point two places

Lane created a default for the Stochastic Oscillator which was 14 periods. A 14-period %K would use the most recent close, the highest high over the last 14 periods and the lowest low over the last 14 periods. %D is a 3-day simple moving average of %K.”

The fast stochastic oscillator measures the currency price relative to the high and low values over the defined period and generates an index from that information. The fast stochastic is the one created by Lane, and variations have been made to create a smoother oscillator known as the slow stochastic oscillator. The slow stochastic oscillator changes the %K with a 3-day simple moving average, which is exactly what %D is in the Fast Stochastic Oscillator. The %D is then smoothed as it becomes the 3-day moving average of the 3-day moving average.

Trading Strategies with Stochastic Oscillator

There are three distinct strategies that can be used to invest using stochastic: a momentum crossover strategy, an overbought and oversold technique, and a divergence methodology.

SPX chart with Stochastic Oscillator [courtesy of Stock Charts ] One of the most popular ways to use slow stochastic is using a momentum crossover strategy . This occurs when the %K crosses above or below the %D. When it crosses above, a buy signal is generated and when it crosses below a sell signal is generated (red arrows). Each signal is telling a trader that momentum is turning and price action will follow. Many traders also use stochastic as overbought and oversold indicators . When the index moves above the 80 index level a security is considered overbought. When the index moves below the 20 level the security is considered oversold (green arrow). Although securities can remain overbought or oversold for a while, the index provides a guide for a potential reversal. A third technique used is stochastic oscillator divergence . This occurs when prices continue to rise and the stochastic is moving in the opposite direction. Although prices continue to move higher (blue arrow), a divergence occurs when momentum begins to move lower.

Stochastic is an excellent tool for traders to use to measure a combination of momentum as well as, periods when a security is poised to diverge.

How to use stochastic indicator in forex trading the best binary options trading platform

How to use stochastic indicator in forex trading the best binary options trading platformHow to use stochastic indicator in forex trading The Best Binary Options Trading Platform vbdesigngroup

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How to use stochastic indicator in forex trading The Best Binary Options Trading Platform vbdesigngroup August 3rd, 2015

Stochastic oscillator trading strategy pdf

Stochastic oscillator trading strategy pdfStochastic Oscillator

Step stochastic indicator is on this post. This is the only correct (non-repainting, non-deformed) version of step stochastic that exist in any platform.

Divergence using Stochastic . some general information about it was collected on this thread forex-tsd/indicators. indicator. html and some of them are on this post .

painting the past . Stochastic is not paiting the past. But we need in some systems for this indicator to be painted the past. Read some exotic explanation/request forex-tsd/manual-tra. system-58.html

how to understand the price movement using 3 Stochastic indicators .

- template attached (M5 timeframe). It was taken from asctrend M5 informational template from elite section here .

- some other informational templates about price movement understanding are here .

Multi Timeframe Stochastic :

- MTF stochastic momentum indicator is here ;

- Stochastic_Standard_4TF_cja updated indicator: this post .

Stochastic with alert is #MTF_Stochastic1.1 with alert is here ; #MTF Stochastic with alert is here ; stochastic with alert EA is here. stochastic with alert thread .

- Many Stochastic indicators in one page collected . is here .

StochHistogram indicator is here .

- StochHistogram indicators with alert (2 indicators) are on this page .

At this page you can find a strategy or system that is easy to follow with your daily trading schedule

and that can be applied successfully with your account balance size and download MT4 Forex indicator

that can be attached to the MetaTrader Forex trading platform

to boost your Forex trading performance.

100% Free - Stochastic Oscillator Trading Strategy - it's an interesting system with a rather low fail rate.

It's based on a standard Stochastic Oscillator indicator, which signals a trend fatigue and change.

That means that you will almost always enter on pull-backs, guaranteeing rather safe stop-loss levels.

Simple to follow. Only one standard indicator used. Safe stop-loss levels. Take-profit level isn't optimal.

Strategy Set-Up

Any currency pair and timeframe should work. But longer timeframes are recommended.

Add a Stochastic Oscillator indicator to the chart, set its %K period to 14, %D period to 7 and slowing to 7, use Simple MA method.

Entry Conditions

Enter Long position when the cyan line crosses the red one from below and both are located in the bottom half of the indicator's window.

Enter Short position when the cyan line crosses the red one from above and both are located in the upper half of the indicator's window.

How do iuse stochastic oscillator to create aforex trading strategy

How do iuse stochastic oscillator to create aforex trading strategyHow do I use Stochastic Oscillator to create a forex trading strategy?

The stochastic oscillator is a momentum indicator that is widely used in forex trading to pinpoint potential trend reversals. This indicator measures momentum by comparing closing price to the trading range over a given period.

The charted stochastic oscillator actually consists of two lines: the indicator itself is represented by %K, and a signal line reflecting the three-day simple moving average (SMA) of %K, which is called %D. When these two lines intersect, it signals that a trend shift may be approaching. In a chart displaying a pronounced bullish trend, for example, a downward cross through the signal line indicates that the most recent closing price is closer to the lowest low of the look-back period than it has been in the previous three sessions. After sustained upward price action, a sudden drop to the lower end of the trading range may signify that bulls are losing steam.

Like other range-bound momentum oscillators, such as the relative strength index (RSI) and Williams %R, the stochastic oscillator is also useful for determining overbought or oversold conditions. Ranging from 0 to 100, the stochastic oscillator reflects overbought conditions with readings over 80 and oversold conditions with readings under 20. Crossovers that occur in these outer ranges are considered particularly strong signals. Many traders ignore crossover signals that do not occur at these extremes.

When creating trade strategy based on the stochastic oscillator in the forex market, look for a currency pair that displays a pronounced and lengthy bullish trend. The ideal currency pair has already spent some time in overbought territory, with price nearing a previous area of resistance. Look for waning volume as an additional indicator of bullish exhaustion. Once the stochastic oscillator crosses down through the signal line, watch for price to follow suit. Though these combined signals are a strong indicator of impending reversal, wait for price to confirm the downturn before entry – momentum oscillators are known to throw false signals from time to time.

Combining this setup with candlestick charting techniques can further enhance your strategy and provide clear entry and exit signals.

Parabolic sar and stochastic oscillator strategy-forex trading strategy description

Parabolic sar and stochastic oscillator strategy-forex trading strategy descriptionShare this forex article:

It is quite simple strategy and two indicators are used in this strategy.

• Parabolic SAR and

Stochastic oscillator.

A great mob is practicing this strategy while they are trading during United States market session or London market.

Time Frame:

It works on hourly time frames. Because of this it becomes less effective as users need to analyze higher time frames of Parabolic SAR. You need to collect four hour or daily data in the form of charts.

Markets Suitable:

You need to be very careful about market while using this strategy. This strategy is effective for London and U. S markets only. Don’t use this strategy for Asian markets.

Long Trade:

You must keep in mind that for any time frame

1. SAR dots must lie below the daily time candlesticks.

2. SAR dots must lie below the four hour time frame candlesticks

3. SAR dots must lie below the hourly time frame candlesticks.

Take Profit:

You must keep in mind that the take profit must be lower than 20 pips every time.

Always use the SAR dot that lies below the respected candlestick as stop loss. Then move that stop loss according to the movement of prices.

Amibroker afl kdj indicator

Amibroker afl kdj indicatorAmibroker AFL KDJ Indicator

Amibroker AFL KDJ Indicator

Amibroker AFL KDJ Indicator Stochastic Oscillator is a momentum indicator that measures relationship of close with high low range over defined number of days. KDJ indicator is an extension of Stochastic oscillator. KDJ has been developed from Stochastic Oscillator and includes one more J line along with the traditional D and K lines. Along with D K, J line assists traders in identifying overbought and oversold markets. KDJ indicator can be used for devising trading strategies. Either a trader can buy when all lines (K, D,J) are below 20 and sell above 80 or a trader can use J line to construct a momentum based technique. Trading strategy using this indicator will be explained later. KDJ is better than stochastic in identifying overbought and oversold levels but it is mainly useful for identifying swing moves and not short term moves.

Amibroker AFL KDJ Indicator Construction of KDJ

Construction of KDJ indicator is fairly simple. To understand the KDJ indicator, it is first necessary to understand the construction of stochastic indicator. Stochastic indicator consists of K and D lines which move between 0 and 100. K line in the stochastic indicator is,

K = ((Current Close Lowest Low) / (Highest high Lowest low))* 100

Lowest low and Highest high in this case is the low and high over the look back period defined by a trader.

D line in the stochastic indicator is simple moving average of the K line. Usually D is 3 day simple moving average of K line but it depends on what trader wants to choose. We have used exponential average.

D = N day simple moving average of K line where N is usually 3 or a value decided by the trader.

Now that construction of Stochastic indicator is over, it is time to introduce the J line. J line in the KDJ indicator is nothing but the divergence of D value from the K value. Formula to calculate the J line is,

J = (3*D) (2*K)

In the J line, weightage of D is more when compared with weightage of K. D line is clearly more important as it is the moving average of the K (fastest) line. In the KDJ indicator, K is the fastest line and J is the slowest line.

In the next post well show how to use this indicator in developing a viable trading strategy.

Amibroker AFL KDJ Indicator

Trend following stochastic forex trading strategy

Trend following stochastic forex trading strategyTrend Following Stochastic Forex Trading Strategy

The trend following stochastic forex trading strategy is an easy to understand yet profitable strategy to trade currencies. The only tools we need in order to apply this method is the stochastic indicator, ATR(14) and trend lines.

Preferred Time Frames: 30 min and above

Download link:

Forex Indicators:

Stochastic Oscillator (5,3,3)

Average True Range ATR (14)

Rules for a Long Trade

1) Find an up trending market and draw a rising trend line connecting the successive temporary support bottoms.

2 Wait for the price to pullback towards the rising trend line.

3) Go long in the vicinity of the rising trend line if the Stochastic Oscillator turns positive from oversold market conditions.

4) Place stop 3 pips below the most recent level of support.

5) Trade objective: 50% of 14 day average true range (ATR).

Trading example (GBP/USD 1 Hour Chart)

The gbp/usd is in an up trend supported by the rising trend line. The price pulls back towards the rising trend line while the Stochastic Oscillator turns positive from oversold market readings (below 20).

We open a long buy at 1.5590 with stop 3 pips below the most recent level of support at 1.5590. Our trade objective is 50% of ATR which is 75 pips. The trade was closed about 4 candlesticks later at 1. 5690 for 75 pips while the risk was only 25 pips (+ spread).

Rules for a Short Trade

1) Find a down trending market and draw a falling trend line connecting the successive temporary resistance tops.

2 Wait for the price to rally towards the falling trend line.

3) Go short in the vicinity of the falling trend line if the Stochastic Oscillator turns negative from overbought market conditions.

4) Place stop 3 pips above the most recent level of resistance.

5) Trade objective: 50% of 14 day average true range (ATR).

The chaosrift

The chaosriftSimple Scalping using the 9,4,3 Stochastic

In this article I will be sharing a very simple Forex trading system. This can be used on the 1 minute or 5 minute chart and if done right, can prove itself to be very profitable.

Future plans: This is my first “trader’s” strategy. My plans for this are to set out a trading strategy and to also accompany it with a Metatrader 4 Expert Advisor. We’ll start simple and build up a strategy from here.

Stop loss and take profit

The most challenging thing for a trader is when to let go and sell, be it a loss or a profit. When executing the order, set your stop loss to be about 10-20 pips and the Take Profit to be about the same. This way you have an even up/down with a minimal loss. The lower the spread the better. Under 2 pips is ideal. Most major currency pairs (USDJPY, EURJPY, USDCAD) have low spread.

The Stochastics

Especially for beginning traders, what to set each indicator to can be a confusing and daunting task. There’s a million settings and combinations that’ll make anyone’s head explode. The following are simply guidelines to push you to your own path.

Stochastic 9,4,3. This stochastic is use for determine the buy and sell trading signal in short term time frame. M1 to M15.

Stochastic 12,4,12. This stochastic indicator is use for identify the buy and sell trading signal in medium term time frame. M30 to 1H.

Stochastic 24,4,24. This stochastic indicator is use for identify the buy and sell trading signal in long term time frame. 1H to the daily.

Trade rules

Now that we’ve established a simple setup for the Stochastic, we need to define clear rules of when to buy, or known as Short/Long.

Go Long: When all of stochastic oscillator lines are in oversold level (Under 20), and the signal line crosses over the main line in an upwards move.

Go Short: When all stochastic oscillator indicators are in overbought level (Over 80). Open a short position (sell order) and hope it hits the pips quick.

5min forex scalping strategy with stochastic and supertrend indicator

5min forex scalping strategy with stochastic and supertrend indicator5 Min Forex Scalping Strategy With Stochastic And Supertrend Indicator

Benefit from the 5 min scalping fx strategy with the special Supertrend Metatrader 4 indicator. There are only a few steps required to open buy and sell trades with a 10 pip profit target.

Indicators: SuperTrend, Stochastic Oscillator (%K period: 7, %D period: 3)

Preferred time frame(s): 5 Min

Trading sessions: London, Us

Preferred Currency pairs: EUR/USD, GBP/USD, GBP/JPY, EUR/JPY, AUD/USD, USD/JPY

USD/JPY M5 Trading Example

Our system provided us with 3 profitable buy entries along an up trend. Total profits: 30 pips. One open trade at 104.86.

Trading Rules

Price has to trade above the SuperTrend indicator (green line)

Stochastic touches the 20 level (or go below 20)

Stochastic blue line crosses the red dotted line from below

Price has to trade below the SuperTrend indicator (red line)

Stochastic touches the 80 level (or go above 80)

Stochastic blue line crosses the red dotted line from above

This is your sell entry signal. Place stop-loss 1 pips below the declining SuperTrend line.

Stochastic oscillator

Stochastic oscillatorStochastic Oscillator

The Stochastic Oscillator was developed by Dr. George Lane to track market momentum.

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The indicator consists of two lines:

%K compares the latest closing price to the recent trading range.

%D is a signal line calculated by smoothing %K.

Slow Stochastic incorporates further smoothing and is often used to provide a more reliable signal.

Stochastic Oscillator Trading Signals

If the Stochastic Oscillator hovers near 100 it signals accumulation. Stochastic lurking near zero indicates distribution .

The shape of a Stochastic bottom gives some indication of the ensuing rally. A narrow bottom that is not very deep indicates that bears are weak and that the following rally should be strong. A broad, deep bottom signals that bears are strong and that the rally should be weak.

The same applies to Stochastic tops. Narrow tops indicate that the bulls are weak and that the correction is likely to be severe. High, wide tops indicate that bulls are strong and the correction is likely to be weak.

Ranging Markets

Signals are listed in order of their importance:

Go long on bullish divergence (on %D) where the first trough is below the Oversold level .

Go long when %K or %D falls below the Oversold level and rises back above it.

Go long when %K crosses to above %D.

Short signals:

Go short on bearish divergence (on %D) where the first peak is above the Overbought level .

Go short when %K or %D rises above the Overbought level then falls back below it.

Go short when %K crosses to below %D.

Place stop-losses below the most recent minor Low when going long (or above the most recent minor High when going short).

%K and %D lines pointed in the same direction are used to confirm the direction of the short-term trend.

Lane also used Classic Divergences. a type of triple divergence.

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Trending Markets

Only take signals in the direction of the trend and never go long when the Stochastic Oscillator is overbought, nor short when oversold.

If Stochastic Oscillator rises above the Overbought line, place a trailing sell-stop. When you are stopped in, place a stop loss above the High of the recent up-trend (the highest High since the signal day).

Stochastic Example

The Slow Stochastic Example illustrates the trading signals. This study focuses on the trailing stop entry technique used in a trending market.

Intel Corporation is shown with aВ 21 day exponential moving average (MA) and 7 day StochasticВ %K andВ %D. The MA is used as the trend indicator with closing price as a filter .

Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator that compares a currency pairs closing price to the normal price range it has been displaying over a specified time period. The Stochastic Oscillator can has its sensitivity to market movements reduced or increased by adjusting the time period, or by taking a moving average of the result.

The idea behind the Stochastic Oscillator is that in an uptrend market, prices generally tend to close nearer to the high for the period, and during a downtrend market, prices will often tend to close near their low for the period. The indicator is often used in several different ways at one time as it is multi-faceted.

The first way traders will use this indicator is to trade like a moving average crossover system. In other words, when the quicker of the two moving averages crosses above the slower one, it is a buy signal. Of course, this works in the opposite direction as well. This shows the near-term momentum is building in one direction or the other.

Much like other oscillators, traders will often use the moving averages to determine whether there is likelihood of the currency pair being overbought or oversold as well. There are two lines, the 20 and the 80 that determine this. For example, if you are in a long position and see the Stochastics have the moving averages above the 80 line, you might be getting warned that the pair is now entering overbought territory. The same can be said for the averages dipping below the 20, as it signals oversold conditions.

The Stochastic Oscillator can also determine divergence as well. Generally speaking, when a pair is making new highs, you want to see the averages on the oscillator doing the same thing. If not, you have divergence and a possibly weak undercurrent to the recent surge upward. This works in reverse as well, as a failure to make new lows suggests that there isnt as much selling conviction in the marketplace as the new lows have been made.

Technical analysis macd and stochastic oscillator

Technical analysis macd and stochastic oscillatorTechnical Analysis: MACD and Stochastic Oscillator

By Jim Fink on January 3, 2011

I use charts and technical indicators to make buy and sell decisions, especially in Stocks on the Run where I and Yiannis Mostrous re looking for shorter term trades rather than longer-term investments.

2010 is no more, but it was definitely a good year. The Dow ended up 11%, the SP 500 rose 13%, and the tech-heavy Nasdaq was king of the hill with a 17% gain. Anyone who followed the Hindenburg Omen and/or cardinal climax sell signals in August got his head handed to him, proving that technical and astrological indicators arent infallible. Furthermore, anyone who sold stocks because of the mid-term congressional elections also made a mistake. The lesson to be learned: when the Federal Reserve has short-term rates at zero and is turning on the money spigot full blast with multiple rounds of quantitative easing, no normally reliable bearish technical indicator is going to work.

Best Stocks of 2010

Lets look at which stocks performed best last year. Perhaps by looking at the winners of the past we can learn something about the winners of the future. On the other hand, the extraordinary bullish monetary environment the U. S. markets experienced in 2010 is unlikely to be repeated, so the type of stocks that benefitted from that special market condition might not repeat in 2011.

Whatever, I used my trusty Bloomberg terminal to screen for the best-performing stocks last year that had market caps above $200 million at the beginning of 2010 and have average daily share volume above 200,000. Sure, some microcap stocks had even larger gains, but they are usually thinly traded and incredibly risky, so I view them as non-investable. Lets deal with reality and the types of stocks that reasonable people would actually consider buying. The top-ten list is below:

Simple trading strategy

Simple trading strategySimple Trading Strategy

Simple trading strategy is really a simple trend following strategy. This strategy is really effective if properly applied. Since the simple trading strategy is used on daily chart, you may need to hold the trades for long period of time. Sometimes, it may take months to close your position from the market. And also because this is a longer term trading strategy it is quite riskier if you have little equity to trade with. You need to give space for the price to move. In simple trading strategy we have only three indicators used.

Simple Moving Average, period 150 (SMA 150)

Simple moving average is a very popular and effective tool to determine the trend of the market. Professional forex traders and analysts use it in various ways. There are many forex strategies that are based on the Moving averages. It is also used to figure out the support and resistance in the market. Simple moving average is simply calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. Those time periods in moving average plays vital role in its value. The moving averages which use fewer time periods tend to react quickly to the changes in the price while long term moving averages tend to react slowly to the market price action. So moving averages are called lagging indicator. It is formed only after the prices are determined in the market.

Stochastic Oscillator

The stochastic oscillator is a momentum indicator that uses support and resistance levels. The term stochastic refers the point of the current price in relation to its price range over the period of time. This technical tool attempts to predict the turning points by comparing the closing price of a security to its price range. Stochastic in market forecasting is generally used to see oversold and overbought conditions, momentum crossovers, and the trading the divergence. When the fast moving momentum crosses another slower moving momentum, it usually indicates that the current trend is changing.

Relative strength Index (RSI)

Relative strength index (RSI) falls under the category of momentum oscillator. It measures the velocity and magnitude of directional price movements. It is also used for knowing the strength of the current market trend, knowing the overbought and oversold territory and spotting the divergence on the chart.

Simple Trading Strategy details

Timeframe: Daily

Currency pair: Any

Buying condition using Simple Trading Strategy

Major trend should be up i. e. SMA 150 should be below the price.

Stochastic oscillator should be on or below the level of 20.

RSI oscillator should be on or below the level of 30.

Selling condition using Simple Trading strategy

Major trend should be down i. e. SMA 150 should be above the price.

Stochastic oscillator should be on or above the level of 80.

RSI oscillator should be on or above the level of 70.

Trading strategy using stochastics and15

Trading strategy using stochastics and15Trading Strategy using Stochastics and 15/30 MA Crossover

August 4, 2014 by Adam posted in • No Comments

Hello, traders. Welcome to the 8th Module of the Advanced Technical Analysis Course. Putting Everything Together. And in this lesson, were going to show you how to trade a simple system, using the stochastic oscillator and a 15 and 30 moving average crossover.

Now, this will be the first system developed in this Advanced Technical Analysis Course, and the idea here is to show you how to develop your own trading system using the indicators that you have learned how to use during this course. The simple system uses a 15 and 30 moving average crossover, and extreme stochastic oscillator levels as confirmation.

Now here are the rules of the system. This is a pretty mechanical system, so you dont have to think much about the entries or the exits. We go long when the stochastic is oversold, and the 15 moving average crosses above the 30 moving average. We go short when the stochastic is overbought, and the 15 moving average crosses below the 30 moving average. We always trail our stocks to the next conflictive level following the 15 moving average. This means that in a long position, we will always trail our stocks to the next area of support, and in a short position we will always trail our stocks to the next area of resistance.

If price breaks the 15 moving average, we exit the trade. This means that in a long position, if price breaks with the 15 moving average to the downside, we exit the trade, and in a short position, if price breaks with the 15 moving average to the offside, we also exit the trade. Theres one thing you should know. This system can be used in any time frame. And this means that if youd like to trade a 50-minute charge, and they trade currency fares or stocks, you can do it with this system. And if you like to hold your trades for a long period of time, or the four-hour charge or the daily charge, you can also use the system.

Okay, traders, we are back. And as you can see we have the Daily New Zealand Dollar/US Dollar chart in front of us. And because we are mostly day traders here, were going to go back to the 50-minute charge to use this moving average crossover system with the stochastic oscillator, okay? Now, heres the first example of a trade. As you can see here, we are in an up move, and then boom right here. Im sorry. Right here, we have a moving average crossover, so this means that right here we have our first short entry. And, as you can see here, we have a stochastic oscillator, or overbought levels above 80 when price hits this high.

So here we have the first entry and we are going to be trailing our stocks to the next area of resistance, which is this one, and we dont get stocked out. Then price moves back down and we move it here, then we move it here, we dont get stocked out. When we move it here, then we move it all the way down here, all the way down here. And when we move it here, we get stocked out. And, actually, I would have exited the trade right here when price breaks to the offside on the 50 minute, on the 15 period moving average. And, of course, if you are not quick enough, you always have your stops trailed for you to get out with your profits. And this trade will have yield a nice 24 pips on a nice day trade.

Now, well, if we go back we do have another moving average crossover right here. But to tell you the truth, we dont have confirmation with the stochastic, so I would not have taken this trade, okay? For me, this is not a trade, and the system requires that we have confirmation of the stochastic oscillator, and the stochastic oscillator should be in actual oversold levels for us to be able to go long. Now, here we do have another stochastic crossover, and here we had oversold levels when we hit this low. So we hit this low, and we had oversold, and we had oversold levels, and when the 15-period moving average crosses above the 30-period moving average, we have a set-up to go long. And if we trail our stocks to the next level of support right here, right here, right here, right here, right here, we would have been stocked out at this level right here. We would have yield a nice 30 pip win for us.

And right here we have another example of a good set-up. The stochastic oscillator hits an overbought level at this height right here, and this is what were looking for. We are looking for an overbought level at a high, or an oversold level at a low, and then a moving average crossover. When we have the moving average crossover, we go short and we exit the trade right here when price crosses above the 15-period moving average, yielding another 28 pip win.

And basically, this is how you trade a simple moving average crossover with a stochastic oscillator system. You have to be very, very disciplined because sometimes you will get crossovers, or you will get false signals that you must not take, just like this one, because the rules are not there. Because you are trading a mechanical system, or a semi-mechanical system because the rules for an entry are very specific, and the rules for an exit are also very specific. But this is how you start to create your own system. And if you dont like moving averages where you can use the parabolic SAR, for example, and the RSI with a 200-period moving average, and you can trade off levels and have more discretion on your trades. But if youre