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The Stochastic Crossing HMMA strategy is a trend trading algorithm based on a modification of the indicator of the standard Stochastic indicator using the HMMA moving average. The indicators included in the strategy are trending, so trading using the strategy takes place during a certain trend in the current market. Strategies work on confirmation of each other's signals, so when trading it is important to take into account the signals of both indicators.
The strategy can be used with any currency pairs on all timeframes above M15.
Strategy indicators
The Stochastic Crossing HMMA strategy consists of the interaction of two indicators, each of which is trendy, but at the same time easy to use. Their settings, namely their values, should be adjusted to the selected currency pair and timeframe.
- Stochastic Crossing - arrow trading indicator based on the calculations of the standard Stochastic indicator. Its values remain unchanged:30,10 and 10.
- Hull master MA - modification version of the moving average with a period of 55.
Trading with the Stochastic Crossing HMMA strategy
Trading using the strategy is trend trading, that is, trades are opened directly during the trend determination period by the indicators that are part of the strategy. To determine the direction of the trend, one should take into account the values of the indicators, namely the color and direction of the moving averages and Stochastic Crossing arrows. If an uptrend is detected, long positions are opened, while short positions are opened during a downtrend period. In both cases, trades are closed during a change in the current trend direction.
Conditions for Buy trades:
- The moving average is moving up and is color-coded with growth value.
- Stochastic Crossing under the moving average forms an arrow pointing up.
Upon receipt of a combination of such conditions on a signal bullish candle, a buy trade may be opened, due to the presence of an uptrend in the market. Stop loss should be set at the point of a recent local minimum. The trade should be closed when the color of the moving average changes or a new arrow is formed. At this moment, the current trend may change, which will allow considering opening new trades.
Conditions for Sell trades:
- The HMMA indicator moves from top to bottom and has a color with a falling value.
- A Stochastic Crossing arrow pointing down should form above the moving average.
A sell trade can be opened immediately upon receipt of a full combination of conditions on a signal candle. At this moment, a downtrend is determined in the market. A stop loss order is placed at the point of a recent local maximum. The trade should be closed when the current trend changes, namely when receiving reverse signals from indicators strategies. At this point, it should be considered opening new trades.
Conclusion
The Stochastic Crossing HMMA trading strategy is very effective, as the indicators included in it are very accurate in calculations. The strategy is very easy to use, however, prior practice on a demo account is recommended before use, as well as studying the algorithm for applying the indicators included in it.
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