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 Edward.
Brilliant site here and info. Very decent.
I have seen a few variations of this but this seems to be the best as from what I gather it gives you a few signals to enter a trade while taking one big trade at the same time.
I just wondered, say the main (21,9,9) stochastics start to descend from top signaling a sell, and then part the way down they cross up before finally descending to the bottom: would that signal you to exit the trade, or continue with trade untill the lines cross at the bottom (under the 20 level)?

Thanks, Pete.

In this case we should only re-enter Sell signals.
In other words, we enter only when both Stochastics agree on a direction.


Hi Edward

If both st(21,9,9)and st(9,3,3) indicate enter 'sell' and afterwards st(9,3,3)indicates further 'sell' and 'buy' signals, should we only re-enter sell signals that we started with or can we do both until we exit at st(21,9,9)crossover.


Hi Carlos,
You don't have to change anything. Use Slow Stochastic. Results will be the same.


Hi everybody, from Bogotá, Colombia.

This trading system sounds interesting. My trading program (Metatrader) has only one Stochastic Oscillator. I think is a Slow Stoch. Will results be the same with this oscillator? Must I Change my program?

Thanks in advance, and I wish you Happy Trading!!!

Bogotá, Colombia

Solution is quite simple in this case.

If you are an intra-day trader or a scalper and not planing to leave open positions overnight - use 1 hour chart signal only.

If you plan to take a long term position, then your primary chart is daily, but your best entry point should be chosen using hourly charts. Therefore, here if you have a Buy signal on 1 day chart, but Sell signal on 1 hour chart, you have to wait till 1 hour chart changes its signal to "Buy".


Good evening (or morning...)
This strategy seems interesting indeed.
but, something crossed my mind...
What do I do when the strategy is suposed to work on a 1 hour or 1 day chart and the daily chart gives a buy signal while the 1 hour cnart gives a sell signal?
I'm talking about any strategy, not about a specific one.

Yes, there are such strategies. Many strategies in Forex are specifically "designed" for certain currency pairs.

There are at least two reasons for that I can quickly think of:

First is the spread cost. For example, many scalping strategies recommend EUR/USD (or at most GBP/USD) currency pair, because Euro/Dollar currently has the lowest spread. This means that scalpers who aim just at 3-5 pips profit per trade don't have to pay high spread cost and thus wait long before actually making their profits. And usually there isn't much room for spreads in scalping strategies: you either win your 5 pips or you are going to lose.

Second is currency "behavior", which includes volatility, average pips move per day etc. For example, such currency pairs as USD/JPY, GBP/JPY and GBP/USD are known to regularly produce large moves, which are beneficial for traders using breakout strategies.

There are two rational ways in searching for own trading approach:

1. Choosing a strategy that fits in own daily schedule best and then testing it on suggested (or all) currency pairs picking the best performing one.
2. Choosing a currency pair (using criteria of highest activity hours and own schedule, volatility, trending characteristics, spread) and then looking for a suitable strategy to use with this pair.

In both cases it is always suggested to choose one or at most two currency pairs to trade with and learn as much as possible about their behavior in the Forex market.

Best regards,

Are there strategies that work well on some currency pairs while they won't do the same on other pairs?
Can you give an example?
Is there a reason for this to happen?

Quite possibly. However further testing is required to find the most suitable currency pair.


Is this strategy suitable for scalping?
It is works in TF5?


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