Forex trading strategy #6 (Double Stochastic)
Submitted by Edward Revy on February 28, 2007 - 14:36.
By doubling on Stochastic analysis we are doubling on trading accuracy... However, one should remember that with each new Forex tool added complexity can appear; and a very complex approach is not always good.
Currency pairs: ANY
Time frame chart: 1 hour, 1 day
Indicators: Full Stochastic (21, 9, 9) and Full Stochastic (9, 3, 3).
Entry rules: When the Stochastic (21, 9, 9) lines’ crossover appears – enter (or wait for the current price bar to close and then enter). It will be the major trend.
Look at Stochastic (9, 3, 3) to anticipate swings inside the main trend and re-enter+ the market again – additional entries. Also ignore the short-term moves Stochastic (9, 3, 3) that signal for exit – do not exit early until Stochastic (21, 9, 9) gives a clear signal to do so.
Exit rules: at the next cross of major Stochastic (21, 9, 9) lines.
Advantages: using two Stochastic indicators helps to see the major trend and the swings inside it. This gives more accurate entry ruless and gives a good exit rules.
Disadvantages: needs constant monitoring, and again we are dealing with a lagging indicator.