Most Effective Stochastic + RSI + MACD Trading Strategy (Proven 100x) - Data Trader (1080p, h264) - video Dailymotion

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Transcript

00:00In this video, I'm revealing a simple and profitable trading strategy that is proven

00:06to have a high win rate.

00:08And at the end of the video, I'm going to show you proof of it having a high win rate

00:13by backtesting the strategy 100 times.

00:16So without further ado, let's get on with the video.

00:21For this strategy, we are using a combination of three indicators, the stochastic, RSI,

00:28and MACD.

00:30First, let's start with the stochastic because that will generate our main entry signal.

00:36The stochastic is a very simple to use indicator that does a very good job of identifying overbought

00:42and oversold levels on the market.

00:45It consists of two parts, the blue line, which is called the K percentage, and the orange

00:50line, which is called the D percentage.

00:54One of the most common mistakes that traders make when using this indicator is that they're

00:58trading the stochastic by itself.

01:01So they take a buy position every time the indicator hits oversold and they take a sell

01:06position every time the indicator hits overbought.

01:09If you're still using the indicator this way, you will get a very low win rate.

01:14Instead, you need to combine the stochastic with other indicators to further confirm your

01:19analysis.

01:21And so let's move on to the second indicator for our strategy, which is the RSI.

01:27The RSI is one of the most famous indicators used in trading.

01:31And a popular way of using the RSI is by trading it as an overbought and oversold indicator.

01:38However, for this combination strategy, we already have the stochastic to do that job.

01:45So having two indicators that give the same signals is quite useless.

01:49Instead, we are using the RSI as a trend confirmation indicator.

01:54And to do that, first, we need to go to the indicator settings and change both of these

01:59levels to 50.

02:02So now we have a single line in the middle like this.

02:05And the way we use it to confirm a trend is very simple.

02:09If the RSI is above the middle line, it means that the price is on an uptrend, so you only

02:14take buy positions.

02:16And if the RSI is below the middle line, it means that the price is on a downtrend, so

02:21you only take sell positions.

02:25Now let's move on to the third indicator, which is the MACD.

02:29The MACD is one of the most popular indicators that does a very good job of detecting momentum.

02:36And a common way of using the MACD is by taking a buy position if the MACD line crosses above

02:41the signal line and taking a sell position if the MACD line crosses below the signal line.

02:48However, this strategy only works if the market is trending.

02:53If the market is moving sideways, the MACD often gives false signals.

02:58So that is why for this combination strategy, we are not going to buy or sell just because

03:04the MACD crosses over.

03:06Instead, we are using it to give extra confirmation and making sure that the momentum is on our

03:12side.

03:14And so this is how the stochastic, RSI and MACD strategy works.

03:19First, let's start with our entry signal.

03:23To identify a buy signal, the first step is you want to look at the stochastic and wait

03:29for both the K and D lines to hit oversold.

03:33Then you want to use the RSI to confirm the uptrend by making sure that it's above the

03:38middle line.

03:40The next step is you want to use the MACD to confirm the upwards momentum by waiting for

03:45the MACD line to cross above the signal line.

03:49Once this happens, however, you still need to make sure that both of the stochastic lines

03:53still hasn't hit overbought yet.

03:56And if all the rules are met, you take a buy position.

04:02Let's move on to finding sell signals.

04:04Again, the first step is you want to look at the stochastic and wait for both the K and

04:10D lines to hit overbought.

04:12Then you want to use the RSI to confirm the downtrend by making sure that it's below the

04:18middle line.

04:19The next step is you want to use the MACD to confirm the downwards momentum by waiting

04:24for the MACD line to cross below the signal line.

04:28And you still need to make sure that both of the K and D lines still hasn't hit oversold.

04:34Once all the rules are met, you take a sell position.

04:39Now for your exit strategy.

04:42If you took buy positions, you want to place your stop loss below the nearest swing low and

04:47set your profit target at 1.5 times your stop loss.

04:51Similarly, if you took sell positions, you want to place your stop loss above the nearest

04:57swing high and set your profit target at 1.5 times your stop loss.

05:03So now, before we backtest this strategy 100 times, let's look at it in full action.

05:09In this chart, we can see that both of the K and D lines is at oversold, meaning we are going

05:14to take a buy position.

05:16Then, you want to confirm the uptrend by making sure that the RSI is above the middle line.

05:23The next step is you want to use the MACD to further confirm the upwards momentum by waiting

05:29for the MACD line to cross above the signal line.

05:33And you still need to make sure that both of the stochastic lines still hasn't hit overbought

05:37yet.

05:39Once all the rules are met, you take a buy position.

05:43Now for your stop loss, you place it below the nearest swing low and set your profit target

05:48at 1.5 times your stop loss.

05:51Let's look at another example.

05:54In this chart, we can see that both of the K and D lines is at overbought, meaning we're

05:58going to take a sell position.

06:01Then you want to confirm the downtrend by making sure that the RSI is below the middle line.

06:07The next step is you want to use the MACD to further confirm the downwards momentum by

06:12waiting for the MACD line to cross below the signal line.

06:16And make sure that both of the K and D lines still hasn't hit oversold.

06:21Once this happens, you take a sell position.

06:24And for your stop loss, you place it above the nearest swing high and set your profit target

06:29at 1.5 times your stop loss.

06:33So now, I'm going to prove that this strategy actually works by backtesting it 100 times.

06:39For this backtest, I'm going to use the EURUSD 30-minute timeframe with a starting capital

06:45of $1,000.

06:47And for our money management, we are risking 2% over total capital per trade.

06:52And for each trade, we are using 200 times leverage.

06:56By the way, you can download this backtesting tool for free in the description below.

07:01So without further ado, let's start backtesting!

07:04Come by, place it!

07:06No!

07:07All right!

07:08Let's go ahead!

07:09Go ahead and see!

07:11Like, fill your ticket!

07:14You can add $1,000!

07:16Here is the store, let's go ahead and see!

07:18That's what we're taking!

07:20The store says, you can download it!

07:22And you can do it, how to earn money!

07:25You can do it today!

07:28I'm going to use the store, let's go ahead and set it up!

07:32And finally,

08:01after backtesting the strategy 100 times, the results are in.

08:07It took us 134 days to reach 100 trades.

08:11And out of that 100 trades, we received a very good win rate of 56%.

08:17Our most wins in a row was 5 and our most losses in a row was 3.

08:22And in total, we made a profit of $280.41, which equates to around 28% overall gain of

08:31our $1,000 capital.

08:36So after backtesting, I discovered a couple of optimizations and changes that you can

08:40implement to further increase the win rate for this strategy.

08:44The first one is limiting your stop loss.

08:48So normally, if you're taking a sell position, you want to set your stop loss at the nearest

08:53swing high.

08:55However, in this particular trade, you can see that the swing high is too far away from

09:00the price.

09:01Therefore, your risk will be too large.

09:04And it can potentially give you a massive loss.

09:07And that is why I recommend limiting your stop loss to only 0.15%.

09:13So no matter how far your stop loss is, your loss will never exceed 0.15%.

09:21Another tip that you can use is don't open a new position if you haven't closed your previous

09:26one.

09:27Let me explain.

09:29If you're taking a position, you only exit a trade if the price either hits your stop

09:34loss or profit target.

09:37However, there are times where the trade takes a long time to hit a target.

09:42And as a result, you will miss a couple of entry signals along the way, which is perfectly

09:48fine.

09:49I recommend sticking to only one trade at a time, because managing more than one trade

09:53is very hard.

09:57So I just revealed to you a very simple high win rate strategy that you can immediately

10:02use right now.

10:04And all I ask for in return is for you to invest 2 seconds of your time into liking the video

10:09and subscribe to the channel.

10:11It literally takes only 2 clicks, but it means so much to me.

10:15And you can also check out my other videos as well.

10:18So thank you guys for watching and I'll see you in the next video.

Most Effective Stochastic + RSI + MACD Trading Strategy (Proven 100x) - Data Trader (1080p, h264)

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