The Combined Stochastic MA/Oscillator Forex trading strategy — is a relatively safe trading strategy based on the standard Stochastic Oscillator forex indicator in combination with the normal Exponential Moving Averages(EMA). You can use the moving averages(MA) as the general long-term trend forex indicator, while the stochastic will show you the short-term chart overbought/oversold states, where you can enter a successful pull-back trade.

Combined Stochastic Oscillator/MA Features

  • Rather reliable.
  • Trading with the trend.
  • It is not very easy to follow.
  • No definite target/exit levels.

Strategy Set-Up

  1. Any currency pair should work. Use the D1 timeframe for the long-term trend detection with the Exponential Moving Averages and the H1 timeframe for the short-term chart signal receiving with the Stochastic Oscillator.
  2. Add 3 Exponential Moving Averages(EMA) to the D1 chart, and set periods to 50, 200, and 100.
  3. Add a Stochastic Oscillator forex indicator to the H1 chart, set its %K period to 3, %D period to 14, and slowing to 3, use the Close/Close price field, and set the overbought level to 90% and oversold level to 10%.

Entry Conditions

Enter a Long position when the long-term trend is bullish (the D1 chart shows price above EMA50, EMA50 above EMA100, and EMA100 above EMA200), and the stochastic crosses the oversold level from below on the H1 chart.

Enter the Short position when the short-term trend is bearish (the D1 chart shows price below EMA50, EMA50 below EMA100, and EMA100 below EMA200), and the stochastic crosses the overbought level from above on the H1 chart.

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Exit Conditions

There are no definite SL/TP levels, but the recommended risk/reward ratio is 1/2.

Should maintain a rather tight trailing stop.

Examples

Bearish trend

fxcracked.com combined-stochastic-ma-strategy-euraud-stochastic
fxcracked.com combined-stochastic-ma-strategy-euraud-ma
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Bullish trend

fxcracked.com combined-stochastic-ma-strategy-audchf-stochastic
fxcracked.com combined-stochastic-ma-strategy-audchf-ma

On the example charts, you can see the December 14, 2009, signals generated both for the bearish EUR/AUD and for the bullish AUD/CHF charts. As you see, the signal line for the stochastic oscillator is the actual stochastic, not its MA. The exponential moving averages should form an almost perfect trend for the more accurate signals. In the Short position example, both positions would hit a somewhat optimistic take-profit. In the Long position example, the second trade would end with almost no loss if a tight trailing stop was used.

Warning!

Use this forex strategy at your own risk. fxcracked.com can’t be responsible for any losses associated with using any strategy presented on the site. Using this strategy on the real account is not recommended without testing it on the demo first.

Discussion:

Do you have anymore suggestions or questions regarding this strategy? You can always discuss Combined Stochastic Oscillator/MA Strategy with your fellow Forex traders on the Trading Systems and Strategies forum.

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