Strategy based on Stochastic - how important are the parameters? [Video]

Most of the traders have certainly wondered once how to configure the indicators. Are the default settings the best option? If we make any modifications, will we get better results? We decided to carry out such an analysis on the basis of one of the strategies in which the main indicator determining the moment of entering the position is popular Stochastic. The results are surprising and show how big the difference can be if we use the wrong parameters.

Advantages:

• • Simplicity to use. Each indicator is available for free on most trading platforms.
  • High frequency of signals - scalping strategy. Here, in the "quotation marks", it should be added that only for those who like to click frequently :).
  • Properly configured, it brings considerable profits.
  • Relatively high RR (risk: reward) in the amount of 1: 2, which gives us a mathematical advantage in the market. In other words, we would have to really have a bad streak to make a loss.

Disadvantages:

• • One of the advantages is also a disadvantage in part - it is the frequency of transactions. For some, it would be more convenient to trade a few trades a week, rather than just a few hours.

In conclusion, it is better to remain cautious about this strategy after all. The backtest was only done on 100 examples and was performed for a very short period of time. It is relatively little for the strategy to be considered "Working in all conditions".

Trading strategies is an educational cycle in which we present interesting investment systems intended for Forex market. We discuss the most important principles such as entering and exiting a transaction, the degree of risk, assessing the advantages and disadvantages and checking what results they generated on historical data.

Do you want us to check a specific strategy for you? Let me know in the comment!

The partner of the educational cycle is Tickmill broker.