Wednesday, April 25, 2012

Schaff Trend Cycle indicator

Schaff Trend Cycle

The Schaff Trend Cycle Indicator (STC) by Dough Schaff, was developed to improve upon the speed and accuracy of the MACD indicator when it comes to identifying trends. It uses a MACD Line (the difference  between two exponential moving averages) through a reworked stochastic algorithm.

What we get is a faster cycle identifier - an great aid in identifying trend changes and finding faster entries and exits.

Let's compare charts with Schaff Trend Cycle Indicator and MACD.

The signals about the trend change come fairly close to each other, often at the same time (red vertical lines). But on separate occasions, Schaff Trend Cycle will be faster (green vertical line).

How to trade with Schaff Trend Cycle

Schaff Trend Cycle (STC) oscillates in between 0 and 100 scale.

The 25 level is called a Buy level, the 75 - a Sell level.

The default settings for STC are (10, 23, 50).

Buy Entry:

1. While indicator stays below the 25 - the downtrend is in progress.

2. Once it crosses up above the 25 level - it's the first warning of a changing trend:
place a pending Buy order above the corresponding candle on a chart.

3. Wait for the Buy order to be filled. If the order is not filled, and the price continues lower - not a problem. Keep the pending order further while observing Schaff Trend Cycle behavior and new signals.

Opposite true for Sell entries, where the indicator has to cross the 75 level down to send a signal about a trend change setup.

Forex MT4 indicator b-clock Download the Manual: Schaff_Trend_Cycle.pdf


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