As Pocket Option Broker trading platform continues to improve and recently added an excellent tool to make your trading in electronic contracts more efficient. Welcome to the Schaff Trend Cycle indicator. It was nicknamed the “Swiss Knife of a Trader”.
Schaff Trend Cycle (STC) is a charting indicator used to help spot buy and sell points in the forex market.
STC Indicator combines the properties of two well-known oscillators: Stochastic and MACD. Compared to the popular MACD indicator, STC will react faster to changing market conditions. A drawback to STC is that it can stay in overbought or oversold territory for long stretches of time.
A well-known trader and founder of FX strategy Doug Schaff invented the instrument. Rumor has it that he invented it back in the late 90s but presented to the public only in 2008.
Now Schaff Trend Cycle indicator is available to all Pocket Option Broker traders. You can install it on your screen when you click on it in the list of standard indicators.
Description and settings of the indicator
As you know, Stochastic and MACD have significant drawbacks: the former is lagging, the latter is running fast. In addition, both oscillators are ineffective during the period of a strong trend movements.
In Schaff Trend Cycle Expert Advisor, Doug Schaff fixed the above-mentioned drawbacks and even added corrections for cyclical movements. Thus, the STC indicator generates accurate and timely signals that is effective during trend reversals.
Appearance of the indicator is very similar to its siblings: it has two 25 and 75 levels, as well as a signal line. The Schaff Trend Cycle is in a separate window under the price chart.
The experts recommend using the following settings:
- Fast line – 23;
- Slow line – 50;
- Cycle- 10.
We recommend leaving the pre-set parameters if you are a beginner in trading.
How to trade options with the Schaff Trend Cycle?
We recommend using the STC indicator based on the similar principles as the Stochastic.
- Execute CALL option when the signal line leaves the oversold zone and crosses 25 from the bottom up.
- Execute PUT option when the signal line crosses the 75 from top to bottom.
Another huge advantage is that the above-mentioned indicator is suitable for any asset.
It is recommended to set the expiration period at least 3 bars.
Schaff Trend Cycle indicator gained its popularity in the Forex market. Many traders put it in the heart of their trading system. Later, some traders moved it to the stock market and electronic contracts as it became clear that it suits the market much better.