Best Stochastic Trading Strategy

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Step 1: Check the daily chart and make sure the stochastic indicator is below the 20 lines and the% K line crossed above the% D line.

We trade on the day but taking into account the sentiment and trend of the higher time frame.

This is a crucial part of the strategy because we only want to trade in the direction of the trend of the higher time frame. Our team at Trading Strategy has spent a great deal of time developing the best guide to trading multiple time frames – the key to successful trading. The multiple time frame concept is important because it can give you a more robust reading of the current price action and more, it can help you better time your entry and exit points.

Step 2: Get down to the 15 minute time frame and wait for the stochastic indicator to reach level 20. The% K line (blue line) crossed above the% D line (orange line).
This step is similar to the previous rule, but this time we apply the rules on the 15-minute time frame: wait for the stochastic indicator to reach the 20 level and the% K line (blue line) crosses above the% line D (orange line).

The 15 minute chart is the best time frame for daily trading because it is not too fast and at the same time not too slow.

See the figure below:

Step 3: Wait for the% K stochastic line (blue moving average) to cross above the 20 level
We want to trade smarter, right?

Well, because% k is the fast-moving average, just wait for it to cross above the 20 levels because the% D line will follow suit. We also don’t want to wait too long, as this will result in a reduced profit margin.

Step 4: Wait for a low swing pattern to develop on the 15-minute chart
What is a low swing pattern?

A swing low pattern is a 3-bar pattern and is defined as a bar that has a previous bar and a next bar with a higher low. Here’s how to identify the correct swing to increase your profit.

Here is a visual representation of the Swing Low pattern:

Step 5: Long entry when the highest point of the swing pattern breaks to the upside
Nothing beats an illustration.

Therefore, after following the rules of the best stochastic trading strategy, a buy signal is only triggered once a breakout of the swing low patterns occurs.

Let’s focus again on the EUR / USD 15-minute chart presented above and see how to use the stochastic indicator in combination with the swing low pattern.

See the chart below:

Step 6: Use the protective Stop Loss placed below the most recent 15 minute Swing Low
You want to place your stop loss below the most recent low, as in the following figure. But be sure to add a buffer 5 pips from the minimum, to protect yourself from potential false breakouts.


Intraday trading with the best stochastic trading strategy is the perfect combination between how to use the stochastic indicator correctly and price action. The success of the best stochastic trading strategy stems from knowing how to correctly read a technical indicator and, at the same time, make use of the price action. We also have training for the best short-term business strategy.

Our team at Trading Strategy doesn’t claim to be perfect, but we do have a solid understanding of how the market works. For those of you who are not a fan of lower time frames, we recommend the “Fibonacci Retracement Channel Trading Strategy”, which may be more suitable for your trading style.

Thank you for reading!

Please leave a comment below if you have any questions about the stochastic trading strategy!

About the author

Nafees Saifi // entrepreneur, author, trainer, and stocks and FX trader. 
Nafees Saifi is a professional FX trader from, India. Nafees has extensive experience trading commodities, bonds, and equity futures in the Asian, European, and US markets. Nafees holds a Bachelor of Finance and Economics degree and is focused heavily on Investment Finance and Quantitative Analysis.


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