This trading strategy has been developed by Stochastic Oscillator and Parabolic SAR. These two indicators have been used for many profitable strategies. In this simple strategy you will get buy or sell signal by the combination of these indicators. This strategy is profitable for the trendy market.
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(1) Stochastic Oscillator
(2) Parabolic SAR indicator.
How to get buy signal
20 level of Stochastic Oscillator is considered as oversold area. At that level, when Stochastic makes crossover in the up direction, then it gives buy signal. You need check at Parabolic SAR. When the dots of Parabolic SAR appear below the market price, then it confirms buy signal. Thus you can take buy entry with the confirmation of these two indicators.
How to get Sell signal
80 level of Stochastic Oscillator is considered as overbought area. When Stochastic makes crossover at that level, then it gives sell signal. At the same time, you need to check at Parabolic SAR. When the series of dots of this indicator appear above market price, then it confirms sell signal. Thus you can get sell signal with the confirmation of these two indicators.
Time frame: H1, H4, Daily
Currency pairs: All pairs.
Take profit and Stop loss: Take profit will depend the time frame you are trading. For H1, you can set 50-60 pips take profit. For higher time frame, you can set 80-150 pips take profit. You can close your trade manually when reversal signal comes.
Stop loss should be place below swing low for buy entry. Similarly, for sell entry, stop loss should be place above swing high.
Risk warning: You can get false signal in ranging market. So you need to avoid this strategy on ranging zone. You must follow money management theory for following this strategy. To get good result from this strategy, you need to practice this on your demo account before using on your real account.