Part 1: 15 mins Stochastic Trading

System
Time Frame : 15min
Currency Pairs: EUR/USD,

Indicator: Stochastic (14,3,3) Smoothed

Instruction: Open Stochastic on Metatrader 4.

Click Intsert - Indicator - Stochastic Oscillator
On the Parameter set: %K period: 14
%D period: 3
Slowing : 3
MA method: smooth
On the Level set click “add” 20, 50, 80
*80 = overbroght level
*20= oversold level
*50= mid level

How to use Stochastic Indicator?

We trade when the main line (Light Sea Green color) across the Signal (Red) line. If the Main
line crossing above the Signal line, it will be a “Long” entry signal. On the other hand, If the
Main line crossing below the Signal line, it will be a “Short” entry signal. In addition, you need
aware of the level on the Stochastic. Setting up a Level on Stochastic can let you able to Buy
low Sell High, which mean you can buy at a lower level (20) and Sell a the over-brought level
(80)

Buy when the Oscillator (either %K or %D) falls below a specific level (e.g., 20) and then rises
above that level.

Sell when the Oscillator rises above a specific level (e.g., 80) and then falls below that level.

Buy when the %K line rises above the %D line and sell when the %K line falls below the %D
line.
Usually this is the most common method to use Stochastic Oscillator.

The way I use Stochastic Oscillator?

I understand most of the Stocastic Oscillator setting level is 5,3,3. It is a best way to trade on
smaller timeframe. I strongly recommand to use the level of 14,3,3 to trade because it have less
false signal than the 14,3,3. Therefore, change your level from 5,3,3, to 14,3,3. Also, change the
MA method to smooth so you can clearly see how’s the line crossing more than simple.

How I Entry the trade?

Remeber the different between the way I use Stoch is I am not only “Buy Low (20) and Sell
High(80)”!
Buy when the Oscillator (either %K or %D) falls below level 50 or lower and then rises above
that level.
Don’t Buy when the %K line is below 20 level (even there have a bullish crossing on stoch)

Sell when the Oscillator rises above a 50 level and then falls below that level.
Don’t Sell when the %K line is above 80 level (even there have a Bearish crossing on stoch)

Using Stochastic to trade 15min Chart

For people who are looking for more opportunity to trade, 15 minutes Chart may be suitable for
those trader. Unlike the 4 hour chart, you cannot trade anytime you want because the 4 hour
chart is catching a big picture of trading. On the other hand the 15 minutes chart is catching big
movement at the particular time. Sometimes the 15 minutes chart is Flat and have not trending.
You cannot use Stochastic to trade this Flat Market because the market is slow.

Photo Trading Stochastic is 15min Chart

Stochastic EUR/USD 15min chart
In this photo you will see how I trade 15 min Chart on EUR/USD by using Stochastic Oscillator.

Best time to Trade

I would recommend the best time to trade is from 0:00 GMT to 14:00 GMT. Usually the trend is
start from 6:00 GMT to 12:00 GMT. You could say the best time to trade is on Europe and
London Session. This would be difficultly for some trader like me. I need to start trading from
12:00am to 8:00am in my country. That’s why i sometimes either trade in 4 hour chart or sleep
after 7:00am.

Trading Management

This is the most important part of your trading plan because you may end up losing money even
though you follow your indicator signal. Here is my trading set up:

Take Profit 50pips: Set your target take profit 50 pips.

Stop Loss: 25pips: Set your Stop Loss to 25pips
Exit: Opposite Stochastic Line Crossing
Advantage/Disadvantage of using Stochastic Indicator

I think any indicator or trading system have their advantage and disadvantage. The good things
about using Stochastic is you really see the price movement and able to make small profit in a
short period of time. On the other hands, you may not able to see a Big Picture of Trend of the
Market. For example, if EUR/USD big trend is Bearish (Going Downward), the stochastic
crossing indicator is Bullish (crossing upward). By following the Stochastic indicator you end up
like making a small profit first, and all of sudden you are turning profit into a big net loss
because the small trend is going back to the main trend.

The Real Truth of Stochastic

Stochastic is definitely is a good indicator to trade Forex. It is really fast signal indicator which
you know exactly how the trend is going Right A Way.
You are able to enter the trade at a Right time.

How to earn profit using Stochastic Oscillator?

As I said before, Stochastic is the Fast Signal Indicator. By using Stochastic Oscillator
successfully, you need to combine with a Slower trend indicator. When combine those two
together you will be see both the Big Picture Market and able to execute the trade at a Right
Time.

For more information about the Bigger trend trading, you can read the article below

How to trade Forex by using Supertrend Trading?

How to trade Currency Market by using FXsmooth?