1

Stochastic 200 SMA Forex Strategy

The Stochastic oscillator is a well-known indicator primarily used to identify oversold and overbought market conditions.

Indicator readings below 20 are considered to be oversold while readings above 80 are considered to be oversold.

Here’s a basic trading system based on the Stochastic oscillator.

Trading Tools/Settings

Indicators: Stochastic Oscillator with setting (5,3,3), 200 Simple Moving Average
Time frame(s): 15 Min and above
Trading sessions: All
Currency pairs: All

Download

Download the Stochastic 200 SMA Strategy.

GBP/JPY Daily Chart Example

stochasticforexstrategy1

Trading Rules

Long Entries:

  • Price above the 200 Simple Moving Average
  • Stohastic above 20 from below

Place low risk stop-loss below the most recent support area. Take profit at 1:2 risk to reward ratio or better (or use any other method).

The illustration above shows us 5 entry signals along the uptrend.  4 Winning signals and 1 stopped out (stop-loss hit).

Short Entries:

  • Price below the 200 Simple Moving Average
  • Stochastic below 80 from above

Place low risk stop-loss above the most recent resistance area. Take profit at 1:2 risk to reward ratio or better (or use any other method).

Share Now!

Comments are closed