Hey everyone.I have been using this strategy very successfully for a while now and just thought i might share. I use a stochastic oscillator with 14,3,3 settings. When there is a crossover going up below the 20 level, i buy.when there is a crossover going down above the 80 level,i sell. I trade on hourly charts, anything less than that gives too many false signals.The key part of this strategy is trading a small number of pips.I trade with a limit of 3 and a stop of 30.although this is a small gain, it adds up very quickly.also, this stop and limit combination almost guarantees a profit,because when there is a cross, even the smallest moves last at least 2 hours, giving you plenty of safety room in your positions. This crossover happens usually about 3 to 4 times a day, so whatever your profession, there is time for you to make A trade. And, the more currencies you trade, the more signals per day.This strategy works for all the majors, most minors, stocks,and basically anything that can have a stochastic oscillator applied to it.Personally i apply this strategy to the AUD/USD and NZD/USD pairs because they are cheaper than most pairs by almost half, which allows you to trade more lots.They also are very consistent and not rangy.
Be careful. In this community if you have something good to share you will get shot down and torn to shreds in pretty quick order.
There are those around that will not like you helping others and very soon you will be attacked mercilessly.
Just be mentally prepared and be forewarned. I know you mean well but there are wild animals here.
Thanks a lot, I’ll keep that in mind
The ratio seems a bit off to me
the ratios can be changed depending on what type of trader you are,i have such a wide gap because when there is a cross you could make a bad entry, and in time be down 10-15 pips,close the trade, and take your losses. when i started trading i did this often, and every time i closed a position the currency bounced back and hit the limit.it’s just more cushion room for market movements.
You wait to close the 1 hour candle to take the trade or you take it whenever the cross happens ?
I wait for the candle to close, yes, and if there is a cross I’ll trade it
Mr Cannady,
Have you developed any statistics on wins/losses, etc.?
Would love to see more info.
Thank you for sharing.
Sure, here is the date from when I started using this strategy two months ago. I traded 1 micro lot each trade, using 50:1 leverage, so 1 pip=$1.
Hi MrCannady,
Thanks for sharing your Great Stochastic System. :35:
Question:
When the Stoch price crosses its signal line above the 80 line or below the 20 line, do you wait for price action to cross down across the 80 or up across the 20 line [I]before[/I] making your entry? Or do you enter [I]right away [/I]when the cross is made above the 80 or below the 20 at the hourly candle close?
Also, do you add the spread to your Take Profit of 3 pips?
Can you post a few charts to show your entries?
Great trading!
Bob
This might sound silly… but I’m trading with 50:1 leverage as well, and when I trade micro lots (0.01), 1 pip=1cent, not $1
Are you using a standard account?
Hey Bob,
I don’t factor in the price action with this strategy, I enter right away. I don’t account for the spread if it is below 2.3. If you trade a currency with a high spread, say 3.1 and up, you should definitely add the spread.
I think i must be trading mini lots then, for me each one is 10,000 units, and I’m using a mini account
MrC,
If you are trading “units”, you must be trading a mini account with Oanda. And indeed, 10,000 units = $1.00 per pip. So…when your 3 pip take profit is hit, you earn $3.00 When your stop loss is hit you lose $30.00
But, I noticed on your P&L statement where you only lost $12 or $13 at times. How did you decide to pull out of the losing positions and not let price continue on and hit your stop loss, or reverse for a profit? I also noticed higher and lower amounts than $3.00 profits at times. How are you trading under those circumstances?
Have you tried any filter for your system to avoid situations where price makes a cross above 80 or below 20 and stays overbought or oversold for many bars?
Hey Bob,
I pulled out of those trade because I over-managed my trade and panicked when I saw double digit losses. As it turned out, I I’d left them alone they would have turned out positive. Lesson learned though. The higher amounts come from the market not hitting my limit on the exact value I set. Say I bought a currency at 1.35447 with a (+3) limit at 1.35479, and the market moved to 1.35481.My position would be closed, and I would also receive the .3 of a pip that is left over. The $16 outlier occurred when I shorted a currency right before news came out( which I wouldn’t recommend doing), and it fell about 19 pips.
When price is overbought or oversold for a while, I stay neutral until the %k and %d both reach the 30-50 level when it is oversold, and 70-50 when it is overbought. That usually signifies a new trend is in the works. To filter out bad crosses, I manually look at the crossover, and if it is flat or moving sideways, I don’t trade. I also look at the 30 and 15 min charts to see if they indicate that the hourly is going to follow the crossover indicated, and I also take into consideration time of day of the crossover, along with the day of the week.
Hi mrcannady, i don’t want to be discouraging, but i followed the same path you are walking trough and i can tell you for sure, that in the long run it wouldnt bring you anywhere.
What if you get just 3 losses in a row? I had a sistem based on indicators like that, and it worked greatly for like 2 months. After that time i saw a long series of losses that eaten all my profits in 2 weeks. It’s full of people like me around.
Why this happened? Cause i have no clue of how the market was working, and i based all my decisions on signals given by a math formula (like stochastic) wich is not reflecting the true behavior of the market.
I’m not talking of making a better knowledge of technical analysys, but to understand better who are the parts in this complex game, and how they interact. I know all this can be boring but hey, this is a business, so if u don’t put a lot of effort in it, don’t expect to get rich using just a math formula invented by someone else that 90% traders are using also.
It’s not that easy, otherwise we wouldn’t have 95% traders losing money all the days. Think about it. Learn about the markets, about liquidity, about different type of traders and all the rest (there’s really a lot of stuff), and then you’ll start to use stochastic not for signals, but just to think what losers in the market are thinking. This is a jungle man, nothing is a give away.
Thanks for the input, but i doubt it. I am very well versed about each currency i trade.I look at the structure of the specific countries both socially and economically.I look at where the nations have come from, who has been elected, what tax rules are in place, a countries imports vs exports, and i study all of their economic data.I then use this information to predict where markets are going, and I use my strategy to confirm it. On the technical side, I don’t just jump into the market based on signals.For each pair,I have studied its daily, weekly, and monthly charts.I make sure i know the “revealing three”.That is, where was it 10 years ago,1 year ago, and 1 week ago. I am very well knowledgeable in my field, and confident in my strategy.
So good for you if it works. I just wanted to give my point of view on technical analysis for contribution, i didn’t intended that you are not knowledgeable or that you are just following blind signals. So excuse me if i gave that impression. For what it counts, i hope your system is going to work well for ever.
All is well, no hard feelings
Hi MrC,
I ventured out with my live trading account and made 7 trades on Friday. TP=3 and SL=30. Results? 7 winners and no losers! YAY!
Of course my greedy nature wonders if I can’t change these settings to a higher TP level and/or a lower SL level. I’m sure you have experimented with these settings so I must defer to your analysis. Still…even increasing the TP to 5, and lowering the SL to say 27 could have some benefit it would seem. Your thoughts?
Great trading!
Bob