In the last article I described a simple and robust strategy based on a single indicator which may be a sign not for everyone. Today I will describe simple daily Forex strategy which is based on the classic stochastic oscillator and may be useful for the beginners for the following reasons:
- this tactic is psychologically comfortable because there is no need to hurry when determining the points of entry and exit;
- according to this indicator, the markets for entry and exit are determined by far — almost no false signals;
- you can add other indicators: Elliott wave analysis Fibonacci levels for training work with technical analysis tools.
Daily Forex strategy
This daily Forex strategy is recommended only for the currency pair EUR/USD, as with other currencies it works worse. Trading platform — MetaTrader 4, allowing you to add any indicators. Interval for trading — 1 day.
Principles of trade:
- trade is on the retracement after a strong trend or change its direction;
- essence of trading: analysis of candlestick combinations;
- indicator: Stochastic Oscillator with the following parameters (Period %K = 5, Period %D = 3, Price = Low/High, Slowing = 3, MA Method = Simpe, levels 20, 80).
Download the archive with the template strategy and indicators used
The conditions for opening a buy trade
- Follow the drop-down series of candles with a black body with a size of at least 20 points. The type of candles “doji” (open price is practically equal to the closing price) should not be (doji indicated by the arrow).
- On the last candle the stochastic oscillator must be below level 20. Waiting for the rising candle and open position. Stop loss is set behind the nearest local minimum, but not more than 100 points.
Daily Forex strategy foresees exit from market by two parts:
- 50% closure of the second daily candle, move the stop loss to the breakeven level;
- move the stop loss to the open price of previous daily candle. The remaining 50% will be closed by stop loss, which will give us a little more profit than if closing the position was completely 100% on the second candle.
Opening a short trade is the opposite: waiting for the growth of several white candles (in a row of 4 or more candles). At the last white candle the stochastic must be in overbought (above 80 level). Waiting for a falling candle and the next candle open sell position.
The first half of the transaction closed at the end of the daily candle, moving the stop loss to the breakeven level, to close the third daily candle, stop loss move to the open price. Stop-loss move down to until the position closes for the order (closing of the foot highlighted with a blue circle win at the expense of moving the stop loss to the 3rd black candle).
This daily Forex strategy can be used as additional one, because the number of entry points into the market during one session could be in the 5-10-th, which is not enough to get the big money. But as a workout for beginners this strategy is optimal.