FREE FOREX STRATEGIES

Forex trading strategy #6 (Double Stochastic)


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.

Strategy Requirements:
Currency pairs: ANY
Time frame chart: 1 hour, 1 day
Indicators: Full Stochastic (21, 9, 9) and Full Stochastic (9, 3, 3).


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Hi Ed,

do I have to keep entering the trade when the minor stochastic signal the appropriate trade (sell in the example given above) or Can I just enter the trade once (using the major stochs) and exit at the next crossover of the major stochs?

Bayo

Hi Sammy and Azim,

@Sammy: try this interactive calculator:
Forex money management Calculator
Let me know if there is anything I should additionally cover.

@Azim: In both cases I use Stochastic indicator. (In MT4 it would be Slow Stochastic, in Oanda - full Stochastic, on other platforms it can be called Stochastic Oscillator, which is all the same).

Kind regards,
Edward

Hello Edward,

Cool Stuffs u got there..I like how the 2nd Stochastic filtered the 1st Stochastic..are u using the "Stochastic Oscillator" and "Stochastic"?

regards,
Azim

Hi Edward,
Pls I would really it appreciate it if you could explain lot size(volume) & how lot size(volume) is calculated.
Best Regards,
Sammy

Thank you and welcome, Jilleas!

Best regards,
Edward

Hi Edward,

By "accident" and searching for strategies I was landing on this URL. Great! For now I am trying to build my own strategies for forex trading, especially on EUR/USD. It is confusing for me that there are so many Stochastics indicators. The double one looks good! You can depend on getting some answers from me..........

For now, regards from The Netherlands, country of Option Traders ;-) I prefer Forex!

Jilleas

Hi Edward

Thanks for the advise. Will definitely try out those recommendations.

Best regards

Edwin

I should add that backtesting using the H1 and my above settings I ended the year with a 37% profit but was also down about 30% about a quarter way into the year (that would of made me really nervous in live testing).

I tried running it again before reading your latest response, using only the 21,9,9 crosses for entry/exits.

Period: Jan-Dec 2009
Timeframe: H4
SL/TP: Not set
Starting Balance: $10,000
Fixed Lots: 0.3
Result: Up 40% by about mid-year but down to 6% by end of test

Tried Daily chart next and the results were really bad, was at most in 4% profit and ended the year in 33% loss.

I definitely think this might be more accurate with an intelligent TP/SL, but I don't want to complicate the system too much... I like the KISS methodology.

Thank you for your feedback!
Interesting results there.

Yet, isn't the profit a bit high, though?
You made it 1:10 risk reward, which is awesome, but such profit targets are rarely reached, unless you've caught the beginning of a trend.

In my opinion, we should
A: lower the target, at least twice a s much.
B: instead of setting SL to a fixed amount of pips, try to set it in the most logical place - at S/R level (for a simplified solution, try Fractals).

Best regards,
Edward

Tried backtesting the system (simplified) using only the 21,9,9 stochastic crosses to create trades, and using a 50pip SL and 500pip TP (these are rarely hit but the largest profit was 320pips before reverse cross so I exaggerated the values for testing).

Anyway over 8 months of backtest the system had a profit factor of only 1.14 (which doesn't seem that good) maybe some more work needs to be done for setting the SL better or using some other indicators to keep out of bad trades or enter at break even if an early warning sign of reversal happens?

Hi Edwin,

This one
http://forums.forex-strategies-revealed.com/combination-strategies-t140....

although initially suggested for daily charts, will be in fact good on smaller time frames as well.

This new one is also very interesting:
http://forex-strategies-revealed.com/develop/step-trend

All MT4 systems can be traded on smaller time frames.
http://forex-strategies-revealed.com/mt4/custom-indicators-systems

Some of the scalping systems, such as "5 pips with GBP/USD" and "Trend Trades"
should be explored.
http://forex-strategies-revealed.com/scalping-systems

Best regards,
Edward

Hi Edward
I have tried some of those strategies on your website and I must say they are awesome. But majority of the strategies are for the Daily and H1 TF. I would like to look into 15 mins and 30 mins TF, is there any good recommendations from your available pool of strategies which I can concentrate on?
Thanks

Edwin

thank you Edward.

I see.
Well, we can get such value, if to calculate it this way:
4h = 240 min
so if 30 min is 1/8 of 240 min,
Stoch 5, 3, 3 on 4h TF would resemble Stoch 40, 24, 24 on 30 min TF.

Regards,
Edward


 

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