44# Stochastic Trading Method III “ MTF Scalp ”
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Direction: You need not worry what direction the long term trend is in for this method to work, it works regardless of long term trend direction.
Time Frames: either: 5/15, 15/30, 30/1H, 1H/4H
Entry:
Set a level line on your 5,3,3 stochastic at 61.8 and 38.2.
Your entry/exit is always with the smaller time frame.
The smaller time frame should be one step (one candle) a head of the longer time frame for the cross or one step behind...or exactly the same. This is optional if you are conservative and a common pattern. However, you do not want the longer time frame ahead more than one step of the shorter time frame.
On a long, whenever both tf's cross or are above 61.8, buy long.
On a short, whenever both tf's cross or are below 38.2 sell short.
You can add greater risk if the longer time frame is "near" the cross in the direction of your trade. The longer tf should be across 50 level. This may prolong your trade and could add some risk.
If you don't have this correlation of the 2 time frames, you don't have a trade. This is your filter mechanism.
Exits:
1. If the shorter time frame goes above 80 on a long or below 20 on a short, you definitely want to be out before it re-crosses 80/20.
2. If you nab some pips within 3 candles on the shorter time frame, you may want to exit.
3. If the longer time frame is looking like it will go above 80 on a long or below 20 on a short you may want to ride it out.
4. If the trend is with your trade you may want to stick it out...use a trand channel.
You will quickly notice an average pip gain, you may want to TP that.
An other option for exit is with predetermined Profit Target. Example: for 5-15 Time Frame is: 8 pips AUD/USD, 10 pips EUR/USD, 12 pips GBP/USD.
You need not worry what direction the long term trend is in for this method to work, it works regardless of long term trend direction.
Stochastic MTF Scalping System
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