Hey, is this strategy still working with you?
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Yes this strategy still works for me, but not in the same way as I described before. Thanks for replying to this thread, I have been searching for this thread for years but couldnât find it.
My trading has evolved alot since i first made this post. The stochastic is a great tool, and I have now become more selective when using it. I only like it when the market is clearly trending nowadays. Try to avoid using this strategy in range-bound markets, you will get chopped to death. I also have expanded the TP to 15 and decreased the stop to either 15 or 20 pips depending on the situation. Someone wrote before that in the long run the 3 and 30 would crush your account, and I found this to be true. The strategy is solid, but managing the risk properly is also important. The TP and SL can be adjusted for your specific style of trading.
I have also learned more about price action and market structure, which has helped me tremendously in deciding which trades i will take. I like to trade around whole numbers, halfâs, and quarters. For example, if USD/CHF is at .8930 in a downtrend, I will look to enter at a quarter level of .8925 and take it down to the next whole number at .8900 even. Read âThe quarters theoryâ by Ililan Yotov to understand this idea more, that book really helped me.
I would say the most important thing that Iâve learned using this strategy since then is that it is not necessary to rely completely on the stochastic for entries. If you understand price action and market structure you can trade with a naked chart and catch prices a few pips before the stochastic actually crosses. Once I traded with the stochastic long enough, I eventually learned how to gauge where the stochastic would be without having to have it on my chart anymore. This small tweak of removing the stochastic helped me tremendously. It allowed me to focus purely on what i saw on the chart. Remember that the stochastic is a lagging indicator. So in a way, I was missing out on 7-10 more pips each trade because i was waiting for the stochastic to confirm price action. I read a book by Bob volman called âUnderstanding Price Action: practical analysis of the 5-minute time frameâ and this book helped be understand PA so much more. IT talks about 5 minute charts, but the knowledge in the book can be applied to anytime frame you choose, its a really great read. Highly recommended.
Lastly, one of the other key things that will help you with this strategy is backtesting. I found a simulation platform that lets you replay any chart ,on any timeframe, on any day from the past 2 years. I used this to backtest and practice everyday after i trade. The same way a basketball player has to practice outside of the game to be good, traders have to practice outside of live action to improve also. Backtest as much as you possibly can. In order to backtest efficiently, I also keep track of all trades that I make, whether it is in simulation or if its live. I grade myself on how well i followed the strategy, and I notate what i did right and what i did wrong. I then take that list into my backtesting sessions and work on improving those things specifically. Backtesting has allowed me to be alot more confident in my trades when I am live trading. All i can say is that confidence in the market is priceless. It makes a big difference.
Before i go, I also want to suggest reading as much as possible. FInd what you like to trade, and then scour the web and the library looking for any books, papers, threads, or videos that discuss that topic. I like Dr.Brett Steenbargerâs books, they really help. Start with his book: Enhancing Trading performance. Its a long, analytical and information heavy book, so take your time when reading that. Dont overlook youtube videos either. I have found so much informative info over there, and its all free. Go look at SMB capital, Jay Take Profits, My Strategic Forecast, Akil Stokes, Ian The Master Investor, Doyle Exchange, Jim Cramer from CNBC, and so many more. The information is literally infinite on youtube.
If you made it all the way down here then thanks for reading this, youâre definitely a serious trader. [Removed for Forums Policy violation]
Good luck to you!
Thank you for all this information, I wanted to ask you about the entries of the Stochastic Index does it still work for you.
What matters is thank you and good luck to us and to you
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