The best system on BabyPips! Stochastic Divergence with rules and examples.

This is my main strategy that I love to trade and is highly profitable when you follow the rules. Please read the charts carefully and if you have questions ask and I would love to answer them!

1. This strategy is not as effective on GBP pairs!
2. Recommended pairs are USD/CAD, EUR/USD, USD/JPY, NZD/USD, AUD/USD, USD/CHF; use only 15,30 or 60 minute time frames! 4 hour may also be used but set ups are very few and far between. NEVER USE ON LESS THAN 15 MINUTES!!!
3. Stop Loss is generally around 20-30 pips.
4. Stop Loss is to be just below (usually a few pips) of VERY recent swing low or just above swing high.
5. Take Profit is up to you but I generally go for 30-100+ pips depending on the set up quality and trend.
6. ONLY enter on Bullish/Bearish engulfing (if you want to play super safe only enter on engulfing candle set ups) or Hammer candle and then break above high of hammer on next candle.
7. NEVER enter if the MACD has not crossed in your direction. This is a filter against bad trades and will save you many times!
8. MAIN RULE. Enter on engulfing candle or hammer, after you see a double bottom or double top and there is a divergence on the stochastic (14,3,3) settings. You might on occassion see a double bottom that goes lower on the retest, and this is even better! The same applies for double top. See examples.

Untitled <--CLICK HERE for full size images of examples!!!

Here's a pointer: if you are looking at a sell and the white macd lines have not crossed below the red line (vice versa for a buy) you should not be placing the trade!!! This is added as confirmation and works VERY well.

Untitled <---link for full size pics of this strategy! Please remember to set a break even stop loss after 20 pips or so and dont let a winner turn into a loser!!! Always try to get as much reward as you are risking on a trade!