stochastic

To add comments, please log in or register
MikeLemon
7
MikeLemon  
I base my trade on the analysis of stohastic machines. The date of trading data and sessions are important to me. I am looking for price dynamics for shopping templates. I trade daily by m5 interval.
I am testing a strategy and I thought it would be of interest to members if I post the results of each trade in this thread as they progress from analysis to exit (win or lose).

Documenting the strategy like this will force me to formulate a formal trading plan due to the public exposure. (An area I tend to fall down in).
The test will run for 100 trades, which I estimate will last for approximately six months. The goal at the end of the test is to have a positive balance of 1,000 pips.

The D1, H4, H1 and M15 timeframes will all be traded and all currencies will be traded as long as they meet the selection criteria.

Chart Setup
A candlestick chart is used along with a 50 SMA and a stochastic indicator set to 5, 3, 3. The overbought and oversold areas will be set to 20 and 80.

A 50 SMA moving average is placed on the chart to calculate a slope value. This value is then used as part of the currency selection criteria. The value is the difference in pips between the 0 bar and the 19th bar (20 bars total) of the SMA. The usage of the slope will be made clear in each trade setup description.

A range value between high and low bars is also used in the selection criteria. This value is the difference in pips between the high and low of bar 0 to bar 14 (15 bars total). The usage of the range will also be made clear in each trade setup description.

Strategy
The strategy is rather simple but will differ slightly between some of the timeframes.
As settings change during the testing process they will be documented here. In particular I imagine the range and slope values will change.

General Currency Selection (all timeframes and all currencies)
For any currency to be considered and put on the watch list as a possible trade in any timeframe its price must meet the following 2 criteria:
1. Spread must be less than 4 pips
2. Stochastic must be in the overbought/oversold area.

D1 Timeframe Selection (All currencies)
For any currency to be considered and put on the watch list as a possible trade in the D1 timeframe its price must meet the following criteria as well as the criteria in the General Selection section:
1. Slope must be at least 5 pips in the direction of the intended trade.
2. Range must be at least 80 pips.
3. Make a note the first support or resistance area.
4. Make a note the second support or resistance area.

H4 Timeframe Selection (All currencies)
1. Slope must be at least 25 pipsin the direction of the intended trade.
2. Range must be at least 50 pips.
3. Note the first support or resistance area.
4. Note the second support or resistance area.

H1 Timeframe Selection (All currencies)
1. Slope must be at least 20 pipsin the direction of the intended trade.
2. Range must be at least 40 pips.
3. Make a note the first support or resistance area.

M15 Timeframe Currency Selection (All currencies)
1. Slope must be at least 5 pips in the direction of the intended trade.
2. Range must be at least 20 pips.
3. Make a note the first support or resistance area.

Trade Entry
Once a possible entry has been established we then watch the currency for a possible entry.

General Entry Condition (for all trades)
All trade entries must meet one of the follow
1. A price action entry. E.g. Pin bar or Engulfing bar or
2. Price to move from the overbought / oversold area (with attitude).

D1 and H4 Entry
D1 and H4 trade entries should meet a condition in the General Entry Condition section including the following.
1. The lot size should be broken into two separate trades or
2. The Initial Stop is set to 2 pips past the high / low of the current swing. (Some discretion may be needed here)

H1 and M15 Entry
H1 and M15 trade entries should meet a condition in the General Entry section including the following.
1. The lot size for H1 and M15 is left as a single trade or
2. TP is set to 2 pips plus spread past the high / low of the current swing. (Some discretion may be needed here)

Trade Management D1 and H4
1. Close the first lot at the first support / resistance area and move the second lot to break even.
2. Close the second lot at the second support / resistance area.

Trade Management H1 and M15
1. Close the entire trade at the first support / resistance area
Keith Watford
Moderator
23535
Keith Watford  
Comments that do not relate to this topic, have been moved to "Off Topic Posts".
To add comments, please log in or register