Stochastic Trading Strategy - Perfect For Beginners
► Read the TEXT version of this video - https://vladimirribakov.com/stochastic-indicator-guide/
This stochastic strategy aims to catch the beginning of new strong trends (even if they are micro-trends) that produce a vast amount of pips in a short period of time.
The combination of strong move followed by a very shallow (tight) correction, is usually a signal that price has more to go in the original direction as the trend is very strong at the moment.
Our goal and idea is to get on board during that correction and ride the second wave.
STOCHASTIC STRATEGY RULES
► Time Frame: H1 and above.
► Instrument: Any (fx, stocks, commodities, indices).
► Required Knowledge: How to plot Fibonacci retracement & stochastic.
1. Wait for the price to break above a recent high or low and to get inside an OB or OS zone.
2. Wait for a cross over against the breakout direction (potentially a correction starts) and plot Fibonacci retracement tool between the most recent swing high and low.
3. If stochastic reaches the opposite extreme zone and price still didn’t reach 38,2% retracement when it crosses back and gives a bullish/bearish candlestick enter a trade.
TRADE MANAGEMENT
► Stop Loss
1. A more aggressive approach for the stop loss is right below the last low (buy) that was created (or above the last high created for a sell). This way you will have an amazing risk vs reward ratio.
2. Conservative stop loss would be below 38,2% Fibonacci when buying and above this level when selling.
► Targets
Target 1 – always aim to collect the first target when the price has reached 1:2 risk:reward ratio.
What that means is, if your stop loss is 50 pips, when the trade is in positive 100 pips (twice as much the stop loss), close the first part. That could be anywhere from 50% up to 80% of the initial lot size that you have used. For example, if you have used 1 lot, when you reach target 1, close 0,5 lots up to 0.8 lots and leave the other part running. Once you collect profits at target 1 move your stop loss to break even to free the risk of the trade.
Target 2 – measure the distance of the entire first wave, that would be the move where you have plotted the Fibonacci retracement tool. Project that amount of pips starting from the beginning of the correction to get target 2.
→ Questions, Comments or Suggestions? ←
Drop us a comment below!
► My Trading Websites
https://vladimirribakov.com/ - Vladimir Ribakov’’s Blog
https://vladimirribakov.com/sponsorship-program/ - Top-Rated Trading Systems (2020)
https://vladimirribakov.com/performance-new/ - Trading Systems for 2020
► Feel Free To Follow Me On
https://www.tradersacademyclub.com/ - Traders Academy Club (Facebook)
https://www.instagram.com/vladimirribakov/?hl=en - Instagram
https://twitter.com/VladimirRibakov - Twitter
Thank you for your time!
May you have a great and successful trading week!
To Your Success,
Vladimir Ribakov
Professional Forex Trader
International Certified Financial Technician
This stochastic strategy aims to catch the beginning of new strong trends (even if they are micro-trends) that produce a vast amount of pips in a short period of time.
The combination of strong move followed by a very shallow (tight) correction, is usually a signal that price has more to go in the original direction as the trend is very strong at the moment.
Our goal and idea is to get on board during that correction and ride the second wave.
STOCHASTIC STRATEGY RULES
► Time Frame: H1 and above.
► Instrument: Any (fx, stocks, commodities, indices).
► Required Knowledge: How to plot Fibonacci retracement & stochastic.
1. Wait for the price to break above a recent high or low and to get inside an OB or OS zone.
2. Wait for a cross over against the breakout direction (potentially a correction starts) and plot Fibonacci retracement tool between the most recent swing high and low.
3. If stochastic reaches the opposite extreme zone and price still didn’t reach 38,2% retracement when it crosses back and gives a bullish/bearish candlestick enter a trade.
TRADE MANAGEMENT
► Stop Loss
1. A more aggressive approach for the stop loss is right below the last low (buy) that was created (or above the last high created for a sell). This way you will have an amazing risk vs reward ratio.
2. Conservative stop loss would be below 38,2% Fibonacci when buying and above this level when selling.
► Targets
Target 1 – always aim to collect the first target when the price has reached 1:2 risk:reward ratio.
What that means is, if your stop loss is 50 pips, when the trade is in positive 100 pips (twice as much the stop loss), close the first part. That could be anywhere from 50% up to 80% of the initial lot size that you have used. For example, if you have used 1 lot, when you reach target 1, close 0,5 lots up to 0.8 lots and leave the other part running. Once you collect profits at target 1 move your stop loss to break even to free the risk of the trade.
Target 2 – measure the distance of the entire first wave, that would be the move where you have plotted the Fibonacci retracement tool. Project that amount of pips starting from the beginning of the correction to get target 2.
→ Questions, Comments or Suggestions? ←
Drop us a comment below!
► My Trading Websites
https://vladimirribakov.com/ - Vladimir Ribakov’’s Blog
https://vladimirribakov.com/sponsorship-program/ - Top-Rated Trading Systems (2020)
https://vladimirribakov.com/performance-new/ - Trading Systems for 2020
► Feel Free To Follow Me On
https://www.tradersacademyclub.com/ - Traders Academy Club (Facebook)
https://www.instagram.com/vladimirribakov/?hl=en - Instagram
https://twitter.com/VladimirRibakov - Twitter
Thank you for your time!
May you have a great and successful trading week!
To Your Success,
Vladimir Ribakov
Professional Forex Trader
International Certified Financial Technician
