Moving Averages and Stochastic: Simple Indicators for a Simple Trading Strategy

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Strategies help traders avoid common mistakes by providing a strict and understandable analysis system. By following it, you get closer to success and understanding market patterns.

Here’s a simple strategy that both beginners and professionals can use.

Required indicators:

  1. Short-term moving average (50-period MA)
  2. Long-term moving average (100-period MA)
  3. Classic Stochastic (14, 3, 3)

Instructions

Example

Let’s take a look at a 15-minute USDCAD chart.

We see a clear bearish trend since a short-term moving average (50MA) is below the long-term moving average (100MA). Therefore, in this situation, we will be looking for selling opportunities.

Bearish trend (50MA < 100MA)

  • Stochastic is above 80
  • Price closed below 50MA
  • Entry: 1.30184
  • SL: 1.30319 (slightly above 50MA)
  • TP: 1.29977 (1.5 risk-reward ratio)

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