Sign In with Google
Sign In with Facebook
The Step Stochastic indicator is a modified version of the standard Stochastic forex indicator with the addition of the ATR indicator as a filter. Instead of inheriting the minimum and maximum from the ATR of the previous step, the minimums and maximums are checked for the number of bars specified by the user arbitrarily. This method does not deform the calculations and is quite good reacts to the latest data and the slightest market changes. It is represented in the lower window of the price chart as two intersecting lines, the distance between which is colored in a certain color depending on the current trend. Thus, the indicator algorithm can be used to trade with the trend, that is, with using some indicator values, the current market trend is determined, and only then, taking into account its direction, any trade is opened.
The Step Stochastic indicator is suitable for trading on any timeframes using any currency pairs, as their choice will not affect the effectiveness of the indicator.
Input parameters
The Step Stochastic indicator settings consist of several sections. For example, the Colors section is responsible for its color gamut and value thickness, the Levels section is responsible for adding signal levels to the indicator window. While the Input Parameters section consists of several points, each of which is directly related to his technical work.
- Price to use in calculations - the type of price to which the indicator's calculations are applied. Default is Median price.
- ATR calculation period - indicator calculation period. The default value is 10.
- K fast - period of the indicator's fast signal line. The default value is 1.0.
- K slow - period of the indicator's slow signal line. The default value is 1.0.
- ATR minimum maximum window size - the number of bars to which the indicator calculations are applied. The default value is 256.
Indicator signals
Signals of the Step Stochastic indicator are generated at the moment when the current movement is determined in the market. To determine the current market trend, one should take into account the intersection of the indicator lines with each other, their general direction and the color of the zone between them. And thus, if the trend is up, long positions are opened, and if the trend is down-short. All trades are closed at the moment when the indicator gives a reverse signal, characterizing the change in the current market movement.
Signal for Buy trades:
- The indicator lines intersect so that the fast line is higher than the slow one, while both lines move up and the distance between them has a color with a growth value.
Upon receipt of such conditions, a buy trade may be opened on a signal bullish candle, due to the presence of an uptrend in the market. Such a trade should be closed after the indicator lines cross again, since at this moment the current trend may change, which will allow considering the opening of new trades.
Signal for Sell trades:
- The indicator lines move down and intersect so that the slow line is higher than the fast one, while the distance between the color lines with the growth value.
A sell trade can be opened immediately upon receipt of such conditions on a bearish signal candle, which in turn will be determined by a downtrend in the market. The trade should be closed when the current trend changes, namely after the next intersection of the lines, which will allow considering the opening of new trades.
Conclusion
The Step Stochastic indicator is a universal trading algorithm that works very accurately without redrawing. Its calculations are somewhat different from other similar indicators, which in turn makes it very effective. Moreover, the indicator is very easy to use and will suit even beginners who can improve their trading skills by using a demo account.
You may also be interested The iTrend Trading Indicator for MT5
