Stochastic for NinjaTrader, MetaTrader

This is countertrend strategy and, as you may guess, it analyzes the movement of the Stochastic Oscillator. You should use this indicator when no strong long term altering on the market exists. It will be possible on such conditions to sell on highest and to buy on lowest prices.

Description

The Stochastic Oscillator consists of 2 different lines: %k and %D. Trader's ussually name %K as First line and %D as smoothed line.

The formula of %k looks like this:

%K=100*((C-Lx)/(Hx-Lx)) , where

X- period of calculation,
Lx- the lowest price on this period,
Hx- the highest price,
C- the close price of current bar.
To find out the value of %D you should use this:

% D=100*(HIGH3/LOW3), where

LOW3-The summ of subtracting of prices H and L (Hx-Lx) from formula of %K for the 3 bars.
HIGH3-The summ of subtracting of prices C and L (C — Lx) from formula of %K for the 3 bars.

When you find out all values for each bar of the chart, the range of line will be from 0 to 100. Take a look on the picture to evaluate the usefulness on countertrend market.

Stochastic Oscillator Example

Signals

As you see on the picture, the signal for selling appear when line %K cross %D from above. And we recommend using the signals for short only if the indicator lines are above 70 or 80. On the print screen it is a pink line. If you are looking for signals to buy then the line %k should cross the %D from below 20 or 30 level.

And as usual we use the take profit order, stop loss and trailing stop for the closing of our positions.

Download trading robot

You may download those applications from our forum. This is link for NinjaTrader and this for MetaTrader.

I will tell you the secret of getting rich on Wall Street. You try to be greedy when others are fearful, and you try to be very fearful when others are greedy.
Warren Buffett