Slow Stochastic Trading Strategy

Published:23 January 2019 Updated:21 June 2024

Stochastic oscillator and Parabolic system is a good combination for effective market analysis binary options. In this article we will look at strategybased on these two instruments. However, they will not be classical versions of the listed indicatorsand their custom modifications. The used solutions are recognized as effective by a large number of online traders, these developments are at the top of the rating in the directory TradingView.

Review of indicators and strategy

The system uses a standard combination of non-standard tools:

  • Selected slow Stochastic Oscillator and custom Parabolic SAR. Its formula is slightly modified compared to the classic version. The appearance has also changed. The signal points of the indicator now better reflect what is happening in the market. The standard color indication has been added: red growth means price decrease, downtrend, and green growth means price increase, upward trend.
  • Slow Stochastic (Slow Stochastic) is a very popular variety of this oscillator. It is characterized by its slowness. But this does not mean that it has become slower to react to price fluctuations. On the contrary, its reaction speed has increased. The slowness manifests itself in something else. In the construction of the line. It is characterized by a high degree of smoothing, so it better reflects the balance of forces on the market. In other respects, the Slow Stochastic is not very different from the classical version. It also shows the balance of forces and the overbought/oversold condition of the market.


Terminal setup

The strategy belongs to the number of professional systems, so special software equipment is required. Modern online services have freed traders from the need to install all sorts of software – the necessary services are available in any browser. In our case you need “Live Schedule.” from TradingView and any trading terminal. One of the best companies is PocketOptionso if you haven’t made up your mind yet about trading platformWe definitely recommend that you pay attention to the Pocket Option (site). It is an optimal choice for beginning traders and not only. Also pay attention to the broker’s features Stars Binary (site), it will also be comfortable for you.

Step-by-step instructions for setting up the terminal and platform for analysis:

  1. In two different browser tabs we open the trading terminal and the Live chart. In both windows, select one currency pair – any of the available options, for which the largest profit. We also select candlestick chart with a timeframe of 1 minute.
  2. On the platform for technical analysis, we add two indicators – “CM_Parabolic SAR” and “Slow Stochastic”. Insert the names without quotation marks in the search line and apply the found variants from the list to the chart.
  3. Set the Stochastic period for the slow line to 14, and for the fast line to 3.
  4. In the trading terminal in advance we set the investment in the transaction. Expiry date (5 minutes) should be set just before opening a deal.

In the trading terminal, you should select a currency pair. Assets integrated into the trading platform are not suitable for trading according to this strategy. For example, such is the CRYPTO IDX crypto-index from Binomo (bonus 100% to deposit by promo code REVIEWEEK100Activate). This is a very good asset for trading, but it is only suitable for those strategies that use built-in indicators in the terminal. In our case, assets from the category of currency pairs are suitable – EUR/USD, AUD/USD and others, officially quoted on the financial exchanges.


Trading signals by strategy

The parabolic system attracts many traders with its simplicity. According to the indicator signals, the market is always in one of the phases – it either rises or falls. At least, that’s what the Parabolic SAR says. In reality, of course, this is not entirely true. Especially if you look at the chart under different scaling periods. Therefore, the tool is good to combine with other indicators that have a neutral phase of absence trading signals. In our case this role is assigned to the Slow Stochastic. The principle of market analysis according to the strategy is the tracking of duplicate signals from both indicators.

Strategy Signals:

  • Down signal – the red points of the Parabolic SAR move into position above the price bars. The Slow Stochastic curves should cross at the top of the window and break the dotted curve at the 80 level.
  • A signal to go up – green points of the Parabolic move to a position below the price bars, and the Stochastic Oscillator lines come out of the oversold zone (below 20).

Taking into account the possible overbroadness of values, market entry should be made only when the signal candle is already closed. The optimal point to open a trade is the last 3-5 seconds before the bar closes. On the TradingView chart the remaining number of seconds before the close of the candle is indicated next to the quotes on the horizontal scale.

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