The stochastic cross alert forex trading strategy is designed to take advantage of the strength of 3 simple forex indicators to generate easy to read buy and sell signals with good accuracy.
The strategy can be used to predict trend reversals.
Chart Setup
MetaTrader4 Indicators: Stochastic_Cross_Alert.ex4 (default setting), SwingMan-UltraSuperTRIX_PV_4col.ex4 (default setting), Stochastic (5, 3, 3)
Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: Any
Currency Pairs: any pair
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Buy Example (click the image for full size):
Fig. 1.0
Strategy
Long Entry Rules:
The following chart or indicator patterns indicates that a buy entry should be initiated:
- The SwingMan indicator blue arrow points upward above the 0.00 level pointing to a bullish signal. If the grey line of the SwingMan custom indicator crosses the 0.00 also, then we should expect price to bounce higher.
- The Stochastic blue line crosses the red line upward in the oversold region (0 – 20 area) signaling a buy trend.
- The Stochastic cross alert custom indicator green arrow points upward and is aligned below price bars, signaling an uptrend.
Stop Loss for Long Entry: Place stop loss ≥5-35 pips away from entry price. Use small stop-loss for the lower timeframe’s (for example, 5 pips on the 5-minute chart)!
Exit Strategy/Take Profit for Long Entry:
The following rules below are conditions that are necessary for exit/take profit:
- The grey line of the SwingMan indicator crosses the 0.00 level downward and with its red arrow pointing downward around the 0.00 mark.
- The Stochastic blue line crosses the red line in the overbought region (80 – 100 area), indication that price is about to reverse.
- If the Stochastic cross alert custom indicator red arrow appears above price bars, then a bearish trend is in the horizon and you should be gathering your profits for an exit.
Sell Entry Rules
A sell position is in place when the following rules or conditions are observed on the trading chart:
- The SwingMan indicators’ red arrow points downward and is aligned around the 0.00 area, signaling a bearish signal
- The Stochastic blue line crosses the red line downward in the overbought region, which is an indicator that bulls are exhausted in the market and a bears market is underway.
- The Stochastic cross alert red arrow is aligned above price bars pointing downward, an indication that price is heading southward.
Stop Loss for Sell Entry: Place stop loss ≥5-35 pips away from entry price.
Exit Strategy/Take Profit for Sell Entry: The following rules should define your exit or take profit strategy:
- The SwingMan indicator blue arrow points upward aligned around the 0.00 area pointing to a reversal in the existing signal.
- The Stochastic blue line crosses the red line in the oversold region (0 – 20 area), indication that the trend is fading out.
- The Stochastic cross alert custom indicator arrow turns green below price and points upward.
Fig. 1.1
Free Download
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About The Trading Indicators
The Stochastic indicator is a momentum oscillator that aids in determining the overbought or oversold regions, which is why a lot of traders use it today.
Stochastic_Cross_Alert.ex4 indicator offers buy and sell signal based on the oversold and overbought alert of the stochastic indicator using an arrow above or below price bars to indicate sell or buy alerts respectively.
The SwingMan-UltraSuperTRIX_PV_4col.ex4 uses an arrow grey line with an histogram wrapped within the line to predict price action.