ADX and Stochastic Indicator
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In this video tutorial, let’s combine the ADX and Stochastic Indicator for yet another powerful strategy.
By now hopefully, you have gone through all the strategies that we have posted.
If you have not, take time to go through as we are confident that you will find many gold nuggets in each of the videos posted.
As mentioned many times before, there is not a single indicator that can provide accurate buy/sell signals.
We combine 2 or more indicators because we need confirmation before jumping into position.
So let’s get started on the ADX and Stochastic Indicator combination today.
For the ADX, we are targeting that the black line moves above the 30 level.
We want it to be above the 30 level because it’s a signal that the market is about to get volatile.
We do not want to get into position when the currency pair is moving sideways or is stagnant.
When we find the ADX black line moving past the 30 level, we look to the Stochastic Indicator for possible reversal play.
As you might remember, the 2 critical levels of Stochastic is the 20 level and 80 level.
Both these levels represents Oversold and Overbought levels.
Whatever that is oversold or overbought is ripe for reversal… well eventually everything will reverse.
It’s just a matter of time.
For this strategy, what we want to first see is that the ADX is moving past the 30 level.
Then we want to see the Stochastic hitting the 20 level or 80 level and then turning back penetrating the 40 level or the 60 level.
Of course if you choose to be aggressive, you can always enter at the 20 level (for long position) or the 80 level (for short position).
But we like to play it safe.
We want to see that the reversal has some momentum in it before entering into position.
Hence, we want to see it moving into the 40 level (for long position) or the 60 level (for short position).
When both conditions is triggered, we will still look at key support and resistance level as always to confirm that the trade is a good play.
Now the most challenging part of all the strategies we have posted is patience.
And that lies within you.
Just remember that… it does not pay to work in trading.
It pays to stay patient and stay true to rules that you established.
If you can stay patient and execute each of this strategy to the book, profitable trading is not difficult.
Practice and enjoy this strategy and we will see you in the next video.
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