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   Two stochastics trading strategy is based on a combination of slow and fast stochastics, it looks for moments when these two stochastics are at opposite levels, one in the overbought zone and the other in the oversold zone. In this trading strategy, one additional indicator is used - ЕМА20.



  Characteristics of a trading strategy are two stochastics.
- Platform:  MetaTrader 4 .

- Currency pairs: any major.

- Timeframe: H1.

- 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 »


The parameters for stochastics are as follows:

Fast Stochastic:

- fast period% K = 21;

- slow period% D = 4;

- deceleration = 10.

Slow Stochastic:

 - fast period% K = 5;

- slow period% D = 2;

- deceleration = 2.

For both stochastics:

- method MA = Simple;

- prices = Low / High;

- levels = 20% and 80%.

To combine two Stochastic Oscillator indicators in one window, proceed as follows. Set the first indicator as usual. The second drag from the “Navigator” window to the window with the first indicator installed, select the required parameters and set. During installation, we choose for each different colors for clarity and use. If something does not work out for you, at the end of the article you can download two stochastics trading strategy template . Just install the template and get started.


How to install the template in the MT4 terminal read here »»


Trading strategy two stochastics. Rules of work.
We are looking for moments when there is a pronounced trend in the market .
We follow the stochastics. A signal to open a position appears when they are at opposite levels.
To confirm the entry, we look for the corresponding candlestick pattern, which signals a reversal after a short rollback of the price to the EMA20 line.
Consider an example: the EUR / USD currency pair H1 timeframe (the most suitable for this trading strategy)



Points on the chart where you can open a short position in a downtrend are marked on the chart. Please note that at points 1 and 5, the slow stochastic is in the oversold zone, and the fast stochastic only leaves the overbought zone. Also in both cases, you can see the absorption model. These, one might say, are classic stochastics entry points for strategy.

If you look at point 2, the price has approached EMA20, but here we see that both stochastics are at the exit from overbought and oversold zones at the level boundaries. Candles do not draw reversal patterns. There are no obvious signals to open a position.

At point 3, the price did not touch the EMA20 and the fast stochastic did not enter the overbought zone.

At point 4, the price touched EMA20, the slow stochastic is in the oversold zone, but the fast stochastic did not reach the overbought zone and reversed. At the same time, we have a bearish takeover.

At points 3 and 4, you can open a short position, this is at the discretion of the trader.

   As you can see, not always possible entry points correspond to all the rules for opening a position for this trading strategy, but if all the conditions are met, the entries are quite accurate. If signals appear, but all the rules of the strategy are not 100% fulfilled, you can use additional technical analysis tools. If the entry turned out to be erroneous, do not forget to use stop loss to limit losses.

   Take profit and stop loss for a trading strategy are two stochastics.
Take profit and stop loss for this strategy are fixed. The stop loss size is 20 points; take profit is set equal to 50 points. You can try to use support and resistance levels or Fibonacci levels to set take profit.

    Trading strategy two stochastics:download

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