Short Term Trade with good accuracy using Stochastic

This Forex strategy is for extremely short term trades to capture small pips (20 +), but its accuracy is very good. Our trades are always depends on stochastic position over multiple time frames stochastic (15M, 1H, 4H). If you need an explanation of stochastic you will not find it here.

In this Forex strategy 4H stochastic lead our entry and entry will depend on 15M stochastic.

Here we are going to use elasticity concept. This occurs when 15M Stochastic stretches away from the other 2 Stochastic (1H and 4H) and then snaps back. Here 15M Stochastic goes against the trend and then join the trend. You will understand better you will see the below example with picture.

What we require?

1: Three Forex chart with different time frame (15M, 1H, 4H) or custom stochastic indicator on 15M chart (download link is below).

2: Stochastic indicator with setting 14, 3, 3

Entry for Long:

Entry: When 4H and 1H are in uptrend, i.e. both are moving up. 4H and 1H stochastic should be above 61.8 level pointing up. Look for elasticity, if you find 15M stochastic against the 4H & 1H Stochastic then look for following condition: - In 15M Stochastic the fast stochastic line crosses above the slow stochastic line below 23.6 level. If all conditions are satisfied go for Long.

Stoploss: It depends on currency you are trading. Just look the history and find appropriate stoploss. 30 – 40 pips will be good.

Exit: When your profit target is hit or 15M Stochastic moves against you.

Example for Long: Here is 15M GBP/JPY Forex chart with modified stochastic indicator. Here thick red line is 4H stochastic (14, 3, 3), thick blue line is 1H stochastic (14, 3, 3), red and green line is 15M stochastic.

Here 4H stochastic is above 61.8 and moving up, 1H stochastic is above 61.8 and moving up. 15M stochastic forms elasticity and goes below 25 level. When 15M fast stochastic line (green) crosses 15M slow stochastic line (red) go for long.

Entry for Short:

Entry: When 4H and 1H are in downtrend, i.e. both are moving down. 4H and 1H stochastic should be below 38.2 level pointing down. Look for elasticity, if you find 15M stochastic against the 4H & 1H Stochastic then look for following condition: - In 15M Stochastic the fast stochastic line crosses below the slow stochastic line above 73.6 level. If all conditions are satisfied go for Short.

Stoploss: It depends on currency you are trading. Just look the history and find appropriate stoploss. 30 – 40 pips will be good.

Exit: When your profit target is hit or 15M Stochastic moves against you.

Example for Short: Here is 15M GBP/JPY Forex chart with modified stochastic indicator. Here thick red line is 4H stochastic (14, 3, 3), thick blue line is 1H stochastic (14, 3, 3), red and green line is 15M stochastic.

Here 4H stochastic is below 20 level and moving down, 1H stochastic is below 20 and moving down. 15M stochastic forms elasticity and goes above 73.6 level. When 15M fast stochastic line (green) crosses 15M slow stochastic line (red) go for Short.



















You can download the modified stochastic indicator HERE (it work well on 15M chart, don’t try on other time frame it might give you wrong reading). If your Forex trading platform doesn’t support custom indicator don’t bother, you can apply same Forex Strategy with normal stochastic indicator using different timeframe Forex chart.

Best currency to trade using this indicator.

GBP/JPY, EUR/JPY, USD/JPY, GBP/USD