Trading Strategy with EMA & Stochastic — Step-by-Step Guide & Transcript

[00:00] And as you can see, it works fn amazing. One day I was searching the internet for what   I hoped to be the best indicator out there. Now some people would call this a waste of  

[00:12] time because there s not an indicator out  there that can actually work that good.   And they are probably right. I checked indicator after indicator.   And All of these indicators were  promising huge gains but when I  

[00:26] backtested them. They were all complete sht. I was actually pretty depressed because I felt I   was being lied to by these indicator creators. Promising these huge gains, but all I was   getting in return was my stop loss getting hit. After hours of searching through indicators, I  

[00:42] stumbled upon one that looked somewhat promising. I added it to my chart expecting some mediocre   indicator that would right somewhat of the time. But then I checked the chart history   I was blown away from how accurate  this indicator appeared to be.  

[00:56] It was doing a surprisingly good job at  finding where the trends started and ended.   I was starting to get extremely excited  because I thought I stumbled upon a gold mine.  

[01:09] I was starting to see some problems. This indicator was doing a spectacular   But where the problems started arising  was when the market was moving sideways  

[01:24] making false signals and really brought  down the winrate of the indicator.   So I had to think of a way to completely  redesign this indicator. A way to alter   the mechanics and absolutely change the  mathematics and calculations to where they  

[01:39] Yeah, I just changed the settings. First things first.   You need to get on tradingview. If you don t yet  have it, ill leave a link in the description.   Next go to your chart and click indicators. You are then going to search ema trend  

[01:53] meter . Click this one right here. Next Click this litter gear icon to   why this indicator was inaccurate was  because it was a little to sensitive.   And it would enter a buy or sell  from just a little movement.  

[02:09] The ema fast to 21 The ema medium to 34   And then finally the ema slow to 55. Then, click the styles tab and  

[02:21] uncheck this shapes box right here. Then wallah your indicator is more accurate.   But there s still a major problem. So sure, we made the indicator less   sensitive so it will only give us a signal  when there is a greater chance of a trend.  

[02:36] It s still giving us signals when  the market is consolidating.   And as we all know, indicators in  consolidating markets don t work that well.   So we have to find a solution to that. After hours of research of trying to  

[02:52] find a solution to this problem.  I finally found the perfect fit.   This. Okay, I promise its cooler than it looks.   To add it to your chart, type in stochastic  momentum index and select this one by surj,  

[03:06] surjith, surjithctl- this guy. Go to the settings of this new indicator.   Go to the styles tab and change the color of the  stochastic to white. Then raise the opacity.   So now we have 2 indicators on our chart. One for finding trends.  

[03:20] So whats the strategy? First, you have to select a timeframe.   Now this indicator will work for all timeframes. But from my backtesting, I found that it   works extremely well on higher time frames. So id suggest using the 1 hour, 4 hour or daily.  

[03:38] The strategy is actually pretty simple. First, you If you are interested in   entering a long trade. You first need all 3  of these lines to be green just like this.  

[03:50] If 2 of the lines are green and 1 is  still red, we do not enter this trade.   All 3 of the lines must be green  in order to enter a trade.   If you simply just do this in itself on a higher  time frame and look at the chart history.  

[04:04] You will see just simply doing  this works very very well.   green. Chart is going up. This area the indicator is   actually quite surprised. But in old tradinglab fashion,  

[04:20] First thing. We need this white line  to go beneath this bottom blue line.   there s movement or a pullback happening. Next, to make sure we have bullish momentum,  

[04:34] this white line must cross above this red line. If we get this combination we can enter a trade.   So lets go over a trade example. After that I  ll give you one more indicator that changes this  

[04:46] indicators performance by a land slide. First we go on the 4 hour time frame.   Next we wait for the trend meter to have  all lines green. So we re good here.   Next we wait for 2nd indicator to  go below the blue line, like this.  

[05:01] Next, we wait wait for the white line  to cross and go above the red line.   Once this happens. Check your trend  meter and make sure its still all green.   of put your own twist on the indicator. The take profit and stop loss can be  

[05:16] with fair value gaps, orderblocks,  and liquidity works extremely well.   These are kind of advanced topics so im not  going to over all that in this video, I ve  

[05:29] made multiple videos on these topics so if you  don t know what im talking about check those out.   you can apply it to this indicator. An alternate way you can use this  

[05:41] indicator is what im going to call the noob  way. It still works extremely well but just   know you can get a lot more out of this  indicator by adding other confluences.   You re going to enter. Set your stop loss below the recent low.  

[05:54] Then set your take profit at  a 2:1 risk to reward ratio.   Okay lets go over a short example and then I will  give you that final indicator to sky rocket the  

[06:06] of these lines are red this time. Next make sure the stochastic momentum index s   white line has gone above this top blue line. Then finally the white line should  

[06:18] trend meter is all red still. Enter the short trade.   Set your stop loss above the recent high and set  your take profit at a 2:1 risk to reward ratio.  

[06:30] Alright, how about we increase the  accuracy of the strategy bit more eh?   I don t know why I said eh im not Canadian. It  just kind of felt good in the moment moving on.  

[06:42] Now this part is completely optional, but when I  added it to this strategy it increase the winrate   by 9%. Which, may seem like a small number but  in the long run that could be the difference of   thousands of dollars if not 10 s of thousands. Now one of the big problems with this  

[06:58] indicator is consolidating markets. 99% of the losing trades this indicator   had were taken in consolidating markets. So if we found a way to avoid these trades,   it would make this indicator absolutely insane. Luckily for you, I found the perfect solution.  

[07:14] I created an indicator that  does all of that for you.   it will give you important metrics  like trend, momentum, volatility,   and volume. And will automatically  calculate if its bullish or bearish.  

[07:27] But not only that, it will automatically tell  you if the market is consolidating or trending.   Hopefully that little hamster wheel is  spinning in your head right about now.   You go to tradinglab.ai to get the indicator.  I ll also leave a link in the description.  

[07:42] The only thing that sucks is that my indicator  on mt5. Which is another charting platform.   So you do have to have both tradingview  and mt5 open at the same time.   its 100% worth it for the results. So we are going to do the exact  

[08:00] same thing but just add the trend table. Make sure the trend meter is all green. Make sure   the white line dips below the blue line. Then make  sure the white line crosses above the red line.   Next go to the trend table on mt5. In an ideal world we want to see  

[08:15] the consolidation metric to say trending If we see this, it means we can enter the trade   knowing we have a great chance of winning it. Enter the trade. Set your stop loss below recent  

[08:29] low. Set your take profit to a 2:1  and boom you got a winning trade.   This strategy works extremely well. And to be honest, Im kind of   Try it out yourself, let me  know how it works for you.  

[08:43] Thanks for watching, and ill  see you guys next time.