Entering Trade: RSI and Stochastic Indicators Strategy

Some traders prefer medium-term trading; some enter the market every day. The following strategy is suitable for the latter type of traders.

 

Requirements for the strategy:

  • Timeframe: M30, H1;
  • Currency pairs: EUR/USD, GBP/USD, USD/CAD, AUD/USD, USD/JPY;
  • Indicators: RSI (7) with levels at 70 and 30, Stochastic (8, 3, 3) at 80 and 20.

Buying signals:

  1. RSI at 30 or below;
  2. Stochastic lines have crossed and are at 20 or below;
  3. Enter once the new candle opens; Stop Loss is placed at 20 points below the minimum of the candle.

Take Profit for EUR/USD, GBP/USD is at 60 points, other currency have it at 40 points. Orders can be transferred to breakeven and closed when the opposite signal occurs.

Selling signals:

1. RSI at 70 or above;
2. Stochastic lines have crossed and are at 80 or above; 
3. Enter once the new candle opens; Stop Loss is placed at 20 points below the minimum of the candle.

Note:
1. It is advisable to close positions before the release of important news;
2. A position is not recommended to be kept open for more than 5-7 hours.

This strategy is good for intraday trading but can also be applied to long-term trading using higher timeframes.