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Doda Stochastic Forex Trading Strategy

Oct 31, 2019
Doda Stochastic Forex Trading Strategy

You can now download the Doda Stochastic Forex Trading Strategy for free on AtoZ Markets indicators gallery.

The Doda Stochastic Forex Trading Strategy is one of the most underrated technical indicators. We’ve all heard of the MAs, MACD and other oscillators, and the Bollinger Bands, but Donchian Channels and Doda Stochastic isn’t as popular. This might be probably due to its simplicity.

The trading strategy is simply based on the highest high and lowest low for a specified period of time and its midline is the average of the high and low. This technical indicator is a great tool in determining probable reversals of a strong trend or a break from a range, using the break of the midline as a basis of a shift in market sentiment.

Indicators:

  • Donchian Bands
    • IPeriod: 36
  • Doda-Stochastic
    • Slw: 16
    • Pds: 26
    • Slwsignal18

Timeframe: 5-minute, 15-minute, 1-hour and 4-hour charts

Currency Pair: any

Trading Session: any

How to Trade With Doda Stochastic Forex Trading Strategy? 

This strategy is a simple strategy that allows traders to catch probable trend reversals and a start of a fresh trend using the Donchian Bands indicator combined with the Doda-Stochastic custom indicator.

The Doda-Stochastic indicator will serve as our initial filter. We will only be taking trades whenever the market is on an extreme market condition. This could either be at an overbought or an oversold market scenario. During an overbought market condition, we will be looking to trade for a reversal to the downside, while on an oversold market condition, we will be looking to trade bullish reversals. This is determined by the location of the two Doda-Stochastic lines. If above 80, we are said to be on an overbought market condition, while below 20, we will consider the market as oversold. Then, we wait for the Doda-Stochastic lines to crossover indicating that the market is reversing.

Buy (Long) Trade Setup Rules

Entry

  • Doda-Stochastic lines should be below 20 indicating an oversold market condition
  • Doda-Stochastic fast line (lime) should cross above the slow line (red)
  • Wait for price to break and close above the Donchian Bands midline
  • Don’t take trades where the Donchian Bands’ midline cross is far from the Doda-Stochastic lines crossover
  • If the above rules are met, enter a buy market order at the close of the candle

Stop Loss

  • Set the stop loss a few pips below the entry candle

Exit

  • Close the trade as price crosses and closes below the midline of the Donchian Bands midline

Sell (Short) Trade Setup Rules

Entry

  • Doda-Stochastic lines should be above 80 indicating an overbought market condition
  • Doda-Stochastic fast line (lime) should cross below the slow line (red)
  • Wait for price to break and close below the Donchian Bands midline
  • Don’t take trades where the Donchian Bands’ midline cross is far from the Doda-Stochastic lines crossover
  • If the above rules are met, enter a sell market order at the close of the candle

Stop Loss

  • Set the stop loss a few pips above the entry candle

Exit

  • Close the trade as price crosses and closes above the midline of the Donchian Bands midline

How to download and install an indicator?

In order to install the indicator on your MT4 platform, you need to follow these steps:

  1. Click on the “Download Indicator” button located at the bottom of the post.
  2. Save the file to your computer.
  3. Extract and move the files into the MT4>Indicator folder of the MetaTrader4 software file directory.
  4. Restart your Metatrader platform.
  5. Navigate to “Indicators.”
  6. And select the “Doda Stochastic Forex Trading Strategy” template to apply it on the chart.

Note: This indicator was developed by T. Morris. AtoZ Markets does not carry any copyrights over this trading tool.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.

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