Trading strategy with stochastics and TDI

We suggest you to get acquainted with an interesting trading strategy based on custom indicators TDI and Stochastic Slope. Its unquestionable beauty is in its simplicity and possibility of automation. But even if you are not a programmer, it is very easy to work manually. In this strategies Also, there is no need to disperse, all work is done on the AUDUSD on the hourly chart. If you follow the rules properly, according to the author, your biggest disadvantage will be the lack of profit.

Settings and indicators

Indicators must be set as follows: after opening an hour chart of the AUDUSD currency pair, put on it TDI. In this case it is required to disable the fast line of the indicator, for this purpose the fortrader magazine recommends to make it the same color as your background, in our case - white.

Next, in the same indicator window we place Stochastic Slope. It should also disable the dashed blue line, making it the background color. To work we need only levels 68 and 32 of TDI, so we remove the stochastic levels.

Trading rules of the strategy

The TDI indicator should enter the overbought (68) or oversold zone (32). For simplicity, we propose to consider a signal to sell only, so we focus on the level of 68.

2. When the TDI is above or at 68, wait for a sell signal from the stochastic. To do this, the Stochastic Slope must cross the TDI from top to bottom. Once that happens and the stochastic is below the TDI at the close of the bar, we open a sell trade.

3. simultaneously with the deal to sell from the market, we open several pending orders to sell the same volume, above the current price at a distance of 25 points from each other. It is supposed that the totality of indicator readings is a strong signal, which means that if a pullback follows, we will get more profit. There should be no more than 6 trades at a time.

4. Stop Loss is set as soon as the TDI crosses the 50 level at the nearest high.

5. If suddenly TDI was moving down, but suddenly turned around, forming (the indicator, not the price) a double top, the author continues to stay in the position, but removes all pending orders and transfers transactions to the breakeven point. In his opinion, it happens too rarely, but it still happens, so one should not be confused and clearly follow the strategy. Then it will allow you to just stay out of profit without taking a loss.

6. The only way to get a loss is when the first stop loss is set, when the price reverses immediately, but that is also rare and is nothing compared to the profit made. A typical profitable trade on the strategy is 100 pips or more.

It is worth noting that the author does not name options for exiting a position. Therefore, Fortrader magazine suggests transferring a stop loss after the trade on the formed peaks, using trailing stop in the amount of 25 pips or close the deal when the Stochastic Slope crosses the mark of 50 after in the opposite direction, i.e., to sell - from the bottom up. In this case, most often there will already be a reverse position, but not always.

Trading strategy with stochastics and TDI Trading strategy with stochastics and TDI
Trading strategy with stochastics and TDI

One Comment

  1. Thank you very much for the interesting message.
    Immediately I tried to install the indicators and practically get acquainted with the TS.
    However, a problem arose - in one window TDI and Stoch. are set, but for some reason the levels (the same for each indicator 0.32, 0.50, 0.68) do not merge, they are really different. I.e. in the window we have two lines 0.68, two lines 0.50, two lines 0.32. Please advise how to deal with this?

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