My SMA, RSI and Stochastic Strategy

[debren]

Hello everyone, i have also decided to join the league of ever winning traders in the trading journal section of this great forum. The strategy i want to share is what i just started working on and i am currently perfecting the effectiveness of this strategy on a demo trading account.

The strategy comprises of the combination of three (3) indicators which are;

-Two(2) Simple Moving Average(SMA), values 5 & 10;
-Relative Strength Index(RSI), settings--Period=9, level=50;
-Stochastic indicator, settings=14,3,3 and level=20(considered as oversold market) & 80(considered as overbought market).

Time Frame: Daily
Currency Pair: Any Pair

RULES FOR BUYING:
1. Wait for the 5SMA to cross the 10SMA to the upside;
2. Check if the stochastic indicator is in the oversold condition(either below 20 level or just heading above 20 level)
3. Check if RSI indicator is at or above 50 level;
4. If conditions 1-3 are met, place a BUY STOP order at 10 pips above the high of the next candlestick(i.e the daily candlestick after the crossing);
5. Stop loss should be either 100 pips or 80 pips below the low of the previous candlestick(whichever is higher) and the take profit should be either same value (1:1) or double the stop loss value(1:2). Appearance of a counter signal may also be used as the target.

RULES FOR SELLING:
!. Wait for the 5SMA to cross the 10SMA to the downside;
2. Check if the Stochastic indicator is in the overbought condition(either above 80 level or just heading below 80 level);
3. Check if RSI indicator is at or above 50 level;
4. Place a SELL STOP order at 10 pips below the low of the next candlestick(i.e the daily candlestick after the crossing);
5. Stop loss should be either 100 pips or 80 pips above the high of the previous candlestick(whichever is higher) and same apply as in the buy rule for targets(1:1 or 1:2)

See the chart below for a trade taken today on USDCAD.

[simisola]

Your trading system is cool, but what I am a bit not comfortable with is the risk reward of 1:1 and that fact that you have a stop loss of as high as 80-100? To me that is a little somehow because if you have a losing streak, your account will have a drawdown.

[Alexander Tatsumaki]

but what I am a bit not comfortable with is the risk reward of 1:1 and that fact that you have a stop loss of as high as 80-100?

those are unrelated really. he could be using 0.01 lot or 10 lot, would the 100 pips matter if the equity was the same?

if you have a losing streak, your account will have a drawdown.

that would be true regardless. but i guess he believes that his method has an edge over the market, which is not something strange really. i see +4% about on my strategies, some are 3 some are 2. but yes it does happen.

[kammraz]

Your trading system is cool, but what I am a bit not comfortable with is the risk reward of 1:1 and that fact that you have a stop loss of as high as 80-100? To me that is a little somehow because if you have a losing streak, your account will have a drawdown.

those are unrelated really. he could be using 0.01 lot or 10 lot, would the 100 pips matter if the equity was the same?

that would be true regardless. but i guess he believes that his method has an edge over the market, which is not something strange really. i see +4% about on my strategies, some are 3 some are 2. but yes it does happen.

Actually the stop loss is even higher. 80-100 pips below previous low. So I take the liberty of looking at the chart and actually the stop loss is around 140 pips?

At the end of the day it will depend on his winning percentage and frequency of his trade. Anything above 51% per 100 trade will make him be in profit. But this trading using daily candlestick though.

Let us see how it goes for now. I believe thread starter will appreciate any good input from us as well.

[NikitaBelle]

Welcome to the journal section debren!

You got one of my favorite indicator Stochastic, interesting! It's a simple indicator that always misunderstood, anyways, let see how you can make profitable trades out of it and your other indicators combination as well.

I wish you success in your journal and in your trading in general!
Cheers!



P.S. As per section rules, please add your journal to your signature. There is a cool step by step instruction below on how to do it in case you don't know...please check it out.

Section Rules

[Black Mamba]

Welcome mate i am really excites to see how you would make profit out of this strategy, i have used this strategy for some time and let me remind you this is a very good strategy.
Really excited to see some charts here hope you will be posting them soon

[FlyingShark]

Hello everyone, i have also decided to join the league of ever winning traders in the trading journal section of this great forum. The strategy i want to share is what i just started working on and i am currently perfecting the effectiveness of this strategy on a demo trading account.

The strategy comprises of the combination of three (3) indicators which are;

-Two(2) Simple Moving Average(SMA), values 5 & 10;
-Relative Strength Index(RSI), settings--Period=9, level=50;
-Stochastic indicator, settings=14,3,3 and level=20(considered as oversold market) & 80(considered as overbought market).

Time Frame: Daily
Currency Pair: Any Pair

RULES FOR BUYING:
1. Wait for the 5SMA to cross the 10SMA to the upside;
2. Check if the stochastic indicator is in the oversold condition(either below 20 level or just heading above 20 level)
3. Check if RSI indicator is at or above 50 level;
4. If conditions 1-3 are met, place a BUY STOP order at 10 pips above the high of the next candlestick(i.e the daily candlestick after the crossing);
5. Stop loss should be either 100 pips or 80 pips below the low of the previous candlestick(whichever is higher) and the take profit should be either same value (1:1) or double the stop loss value(1:2). Appearance of a counter signal may also be used as the target.

RULES FOR SELLING:
!. Wait for the 5SMA to cross the 10SMA to the downside;
2. Check if the Stochastic indicator is in the overbought condition(either above 80 level or just heading below 80 level);
3. Check if RSI indicator is at or above 50 level;
4. Place a SELL STOP order at 10 pips below the low of the next candlestick(i.e the daily candlestick after the crossing);
5. Stop loss should be either 100 pips or 80 pips above the high of the previous candlestick(whichever is higher) and same apply as in the buy rule for targets(1:1 or 1:2)

See the chart below for a trade taken today on USDCAD.

Hi debren, I believe that you are watching well your charts, but your entry is lagging and let's have the same example, USDCAD in this case. We all know fundamentals and that when a currency is in the condition of the last pair mentioned then we avoid buying it like, hell. Also, if I wanted, so desperate and had the best good feeling that UC is going up then I would made my entry lower, because for this pair it's very hard now to move 200 pips, I would spare 50 pips only.

[fembizz]

Hello everyone, i have also decided to join the league of ever winning traders in the trading journal section of this great forum. The strategy i want to share is what i just started working on and i am currently perfecting the effectiveness of this strategy on a demo trading account.

The strategy comprises of the combination of three (3) indicators which are;

-Two(2) Simple Moving Average(SMA), values 5 & 10;
-Relative Strength Index(RSI), settings--Period=9, level=50;
-Stochastic indicator, settings=14,3,3 and level=20(considered as oversold market) & 80(considered as overbought market).

Time Frame: Daily
Currency Pair: Any Pair

RULES FOR BUYING:
1. Wait for the 5SMA to cross the 10SMA to the upside;
2. Check if the stochastic indicator is in the oversold condition(either below 20 level or just heading above 20 level)
3. Check if RSI indicator is at or above 50 level;
4. If conditions 1-3 are met, place a BUY STOP order at 10 pips above the high of the next candlestick(i.e the daily candlestick after the crossing);
5. Stop loss should be either 100 pips or 80 pips below the low of the previous candlestick(whichever is higher) and the take profit should be either same value (1:1) or double the stop loss value(1:2). Appearance of a counter signal may also be used as the target.

RULES FOR SELLING:
!. Wait for the 5SMA to cross the 10SMA to the downside;
2. Check if the Stochastic indicator is in the overbought condition(either above 80 level or just heading below 80 level);
3. Check if RSI indicator is at or above 50 level;
4. Place a SELL STOP order at 10 pips below the low of the next candlestick(i.e the daily candlestick after the crossing);
5. Stop loss should be either 100 pips or 80 pips above the high of the previous candlestick(whichever is higher) and same apply as in the buy rule for targets(1:1 or 1:2)

See the chart below for a trade taken today on USDCAD.

You are very much welcome mate to this house of success has displayed by journals strategists. I wish you a very good profit and continuous trading success in respective practices. I will like to know if you also make use of the moving averages on higher timeframe charts for support and resistance price levels to filter your trades?

---------- Post added at 10:59 AM ---------- Previous post was at 10:34 AM ----------

Your trading system is cool, but what I am a bit not comfortable with is the risk reward of 1:1 and that fact that you have a stop loss of as high as 80-100? To me that is a little somehow because if you have a losing streak, your account will have a drawdown.

Do not think in that way mate as a stop loss of even 1000pips may come up with small limited risk than the one with 100pips below but the truth is every forex trader has a unique attribute and prowess to view and trade the same market under normal circumstances and conditions.

[debren]

Your trading system is cool, but what I am a bit not comfortable with is the risk reward of 1:1 and that fact that you have a stop loss of as high as 80-100? To me that is a little somehow because if you have a losing streak, your account will have a drawdown.

Thank you for this observation, like i said in my introduction any suggestion of a better fine-tunning of this strategy is very welcomed. I will look at making some adjustment in that regard.

You are very much welcome mate to this house of success has displayed by journals strategists. I wish you a very good profit and continuous trading success in respective practices. I will like to know if you also make use of the moving averages on higher timeframe charts for support and resistance price levels to filter your trades?

The simple moving averages 5 & 10 are fast and slow moving averages and i use it as my first signal to determine the new trend forming.

---------- Post added at 10:59 AM ---------- Previous post was at 10:34 AM ----------



Do not think in that way mate as a stop loss of even 1000pips may come up with small limited risk than the one with 100pips below but the truth is every forex trader has a unique attribute and prowess to view and trade the same market under normal circumstances and conditions.

Actually the stop loss is even higher. 80-100 pips below previous low. So I take the liberty of looking at the chart and actually the stop loss is around 140 pips?

At the end of the day it will depend on his winning percentage and frequency of his trade. Anything above 51% per 100 trade will make him be in profit. But this trading using daily candlestick though.

Let us see how it goes for now. I believe thread starter will appreciate any good input from us as well.

Actually the main reason for starting with such high stop loss is because of the timeframe i am using (daily) and with the fact that this strategy is a swing trade strategy which may last for days or even weeks.

Welcome to the journal section debren!

You got one of my favorite indicator Stochastic, interesting! It's a simple indicator that always misunderstood, anyways, let see how you can make profitable trades out of it and your other indicators combination as well.

I wish you success in your journal and in your trading in general!
Cheers!



P.S. As per section rules, please add your journal to your signature. There is a cool step by step instruction below on how to do it in case you don't know...please check it out.

Section Rules

Thank you. I will soon add my journal to my signature.

Welcome mate i am really excites to see how you would make profit out of this strategy, i have used this strategy for some time and let me remind you this is a very good strategy.
Really excited to see some charts here hope you will be posting them soon

Thank you for this encouraging comments. So i will be counting on your useful input in making this strategy better.

Hi debren, I believe that you are watching well your charts, but your entry is lagging and let's have the same example, USDCAD in this case. We all know fundamentals and that when a currency is in the condition of the last pair mentioned then we avoid buying it like, hell. Also, if I wanted, so desperate and had the best good feeling that UC is going up then I would made my entry lower, because for this pair it's very hard now to move 200 pips, I would spare 50 pips only.

Observation is well noted.

[dzin4aans]

Welcome to Trading Journal section debren I am happy that you have joined us here and definitely looking forward to your journey in your journal. I wish you good luck, green trades and green pips that result in awesome profits