Simple and High Accuracy “Stochastic Trendline Price Action Trading Strategy” – This strategy is based on the trendline and simple overbought and oversold crossover of the stochastic indicator.
- Time Frame: M5 or higher
- Currency Pairs: Any
A trendline is a line drawn over pivot highs or under pivot lows to show the prevailing direction of price.
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- Use a demo account or a small live account first to practice this trading system
Trendlines are a visual representation of support and resistance in any time frame. They show direction and speed of price, and also describe patterns during periods of price contraction.
The trendline is among the most important tools used by technical analysts.
Instead of looking at the past business performance or other fundamentals, technical analysts look for trends in price action.
A trendline helps technical analysts determine the current direction in market prices.
Technical analysts believe the trend is your friend, and identifying this trend is the first step in the process of making a good trade.
A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time.
The sensitivity of the oscillator to market movements is reducible by adjusting that time period or by taking a moving average of the result.
It is used to generate overbought and oversold trading signals, utilizing a 0-100 bounded range of values (A stochastic oscillator is a popular technical indicator for generating overbought and oversold signals).
Stochastic oscillators are sensitive to momentum rather than absolute price.
- Download TraderVersity.Com-StochasticTrendlinePriceAction (Zip File)
- Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators /
- Copy the “TraderVersity.Com-StochasticTrendlinePriceAction.tpl” file (template) to your Metatrader Directory …/templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex system
- Right-click on your trading chart and hover on “Template”
- Move right to select TraderVersity.Com-StochasticTrendlinePriceAction
- You will see “Simple Stochastic Trendline Price Action Trading Strategy” is available on your Chart
- Price should be above the down trendline indicating a new uptrend
- Both stochastics should be below 20 indicating an oversold market condition
- Enter a BUY market order when the WPR line upward and above level -45 line
- Price should be below the up trendline indicating a new downtrend
- Both stochastics should be above 80 indicating an overbought market condition
- Enter a SELL market order when the WPR line downward and below level -55 line
- Set the take profit at 2x the risk on the stop loss (Risk Reward Ratio = 1:2 or higher)
- However, the success of this strategy depends on how the trader would analyze the context of the market conditions.