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Naked Stochastic Forex Trading Strategy

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The naked stochastic forex trading strategy is a really simple forex trading system and guess what? Its only based only on one MT4 indicator, the stochastic.

Why the term “naked”, because this is the crudest and the most basic form of how hot trade the stochastic indicator.

This forex trading strategy is suitable for newbie forex traders who are just starting to learn about forex trading and getting to know how all the MT4 forex indicators behave in the market.

 

Timeframe: Any

Currency Pair:Any

Indicators: only the mt4 stochastic inNaked Stochastic Forex Trading Strategydicator

Refer to this chart below for the selling and buying rules that you are going to read:

 

Selling Rules

  1. Stochastic indicator must be in the overbought region, which is the 80 level region as seen on the chart example above.
  2. the two lines of the stochastic indicator must cross in this 80 level region.
  3. Wait for a bearish reversal candlestick to form and that is your sell signal
  4. place a sell stop order 2 pips below the low of this bearish candlestick.
  5. then place your stop loss 2-5 pips about the high of that candlestick but if the stop loss is too close to the entry price, then look for the nearest swing high and place your stop loss a minimum of 2 pips above it.
  6. for take profit target levels, you got 2 options, aim for a risk:reward of 1:2 or more or use the previous swing high point as your take profit target level ensuring that it is more than 1:2 risk to reward

Buying Rules

  1. Stochastic indicator must be in the oversold region, which is the 20 level region, refer to chart above to see the level I’m talking to here.
  2. the two lines of the stochastic indicator must cross in this 20 level region.
  3. Wait for a bullish reversal candlestick to form and that is your buy signal
  4. place a buy stop order 2 pips above the low of this bullish candlestick.
  5. then place your stop loss 2-5 pips about the high of that candlestick but if the stop loss is too close to the entry price, then look for the nearest swing low and place your stop loss a minimum of 2 pips below it.
  6. for take profit target levels, you got 2 options, aim for a risk:reward of 1:2 or more or use the previous swing low  point as your take profit target level ensuring that it is more than 1:2 risk to reward

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