Stochastic and SMA Trading Strategy

 The trading strategy of Stochastic and SMA uses the signals of the Stochastic Oscillator indicator to enter. In addition to it, another indicator is used: a simple moving average with a period of 200 (SMA200).



Stochastic Oscillator is a well-known technical indicator that is primarily used to identify overbought and oversold conditions of the market. If the indicator reads below 20, the market is considered to be oversold, and if the readings above 80, the market is considered to be overbought.

 The parameters of the Stochastic Oscillator indicator are as follows:

- fast period% K = 10;

- slow period% D = 3;

- deceleration = 3;

- method MA = Simple;

- prices = Low / High;

- levels = 20% and 80%.

SMA indicator parameters:

- Period = 200;

- Method MA = Simple;

- Apply to = Close.

   Characteristics of the trading strategy Stochastic and  SMA.
- Platform: MetaTrader4 .

- Currency pairs: any.

- Timeframe: M15 and higher.

- Hours: around the clock.

- Broker: Forex4you , InstaForex , RoboForex , Fort Financial Services .


Read more about the RoboForex broker in the article “ RoboForex broker. Trading conditions, advantages and services of the company »

 Trading strategy Stochastic and SMA . Rules of work.
Conditions for entering a long position:

The price should be above the SMA200 line. Stochastic crosses level 20 from bottom to top and is above this level. We place the stop loss just below the nearest minimum. Close the position when stochastic crosses level 80 from top to bottom. You can use a fixed take profit or another option for profit taking.

Conditions for entering a short position:

The price should be below the SMA200 line. Stochastic crosses level 80 from top to bottom and is below this level. We place the stop loss just above the level of the nearest maximum. Close the position when stochastic crosses level 20 from bottom to top. You can try another option to close the position.

Consider an example: the GBP / USD timeframe - H1.

The price is below the line SMA200 (downtrend). At this interval, stochastic gave a sell signal three times. All three were profitable. Total profit amounted to 210 points. Of course, there may be false signals to avoid them, I advise you not to enter the market when there is no obvious trend movement on the market (SMA200 line is horizontal). Another point: the Stochastic + SMA trading strategy shows the best results at higher time intervals.