Stochastic OS OB Strategy For MT4
Table Of Contents:
- Stochastic OS OB Strategy For MT4
- The Stochastic OS OB Strategy For MT4 – Long positions
- The Stochastic OS OB Strategy For MT4 – Short positions
- Is the Stochastic OS OB Strategy For MT4 profitable?
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Stochastic OS OB Strategy For MT4 is an overbought and oversold forex trading system. Traders who have had any experience in the forex markets will know that the overbought and oversold levels are used in reference to the trading oscillators.
This trading system makes use of these price levels and can be used as short term scalping strategy. However, trader should note that the overbought and oversold levels can occur during different market conditions. this means that even within a strong trend price action will make a retracement thus moving in the opposite direction to the trend. This is represented in the oscillators buy a movement from overboard to oversold or vice versa.
While it is easy to interpret this trading system as a buy signal or a cell signal when the oscillator moves into oversold or overbought levels, you should also pay attention to the trends. This is a rookie mistake, and it can cost you quite a bit if you're not fully understanding how the overbought and oversold levels work.
Let's now take a look at the indicators used in the stochastics overbought oversold forex trading strategy. There are two indicators on the price chart. These are the Bollinger bands indicator and the support resistance indicator. The Bollinger bands makes use of the regular standard settings. As you might already know, the Bollinger bands indicator can be used as both a trend following's trading strategy and as a volatility strength indicator as well.
The support and resistance level indicator, as the name suggests plots the support and resistance levels on the price chart. This is denoted by the blue resistance levels and the red support levels.
In the first sub window of the stochastics overbought oversold trading system, we have a custom indicator called the nice value chart indicator. This indicator is rather unique because it plots a histogram within the fixed levels. Most of the times, the swing high and swing low in price coincides when this indicator touches one of the boundary lines. You can therefore use this indicator to pinpoint the swing high and swing low levels this in turn can show you the potential turning points in the trade.
In the next sub window of the stochastics overbought oversold trading strategy, we have a custom indicator called the stochastics friendly indicator. This indicator is nothing but a modification of the regular stochastics oscillator. You have the two lines that you can see which are standard to any stochastics oscillator. However, what is unique about this indicator is that when the line moves out from the oversold levels, it will plot in green color.
Likewise, when the stochastics oscillator moves out from the overbought levels, it will turn to red color. Traders can use this indicator as a confirmation tool before they enter the trade. This will show you the turning points in the price and will signal the short term retracement that occurs within the trend or during a sideways range.
Let's now take a look at how you can trade long and short positions using the Stochastics overbought and oversold forex trading strategy.
The Stochastic OS OB Strategy For MT4 – Long positions
To take long positions using the stochastics overbought oversold strategy, wait for price to make a swing low. This can be seen as a support level will start to plot. You can also additionally get a confirmation that the bottom has been formed in the market by looking at the nice value chart. Here you will see that the histogram touches the lower boundary.
The next step is to identify a local swing high that formed and set your long position at this level. Now look to the previous candlesticks and set your stop loss to the swing low that formed. Now you can calculate your fixed risk to reward ratio and set your take profit level accordingly. Another way to set your take profit is to simply look at the most immediate resistance level to the upside. You can use this as your target level.
The Stochastic OS OB Strategy For MT4 – Short positions
For short positions using the stochastics overbought oversold strategy, wait for price to make a swing high. This can be seen as a resistance level will start to plot. You can also additionally get a confirmation that the top has been formed in the market by looking at the nice value chart. Here you will see that the histogram touches the upper boundary.
The next step is to identify a local swing load that formed and set your short position at this level. Now look to the previous candlesticks and set your stop loss to the swing high that formed. Now you can calculate your fixed risk to reward ratio and set your take profit level accordingly. Another way to set your take profit is to simply look at the most immediate support level to the downside. You can use this as your target level.
Is the Stochastic OS OB Strategy For MT4 profitable?
Our final opinion about the stochastics overbought oversold strategy is that this is a fairly robust trading system. It is full-fledged because of the fact that it makes use of the optimal number of indicators. You can easily understand the market trends, the volatility, the support and resistance levels. Besides this the use of the indicators in the sub windows can serve as an additional confirmation tool for your trading entry and exit.
We highly recommend that even beginners could use the stochastics overbought oversold trading strategy. This can be a great way to understand price action and also get a good understanding of the way the different indicators work. However, we recommend that trader should first read up on the different indicators that are used in this trading system.
The template that comes with the stochastics overbought oversold trading strategy is also lightweight. This means that you can use this trading template to monitor multiple charts at the same time.
Download the complete system description and the files here:
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
