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How to Use the Schaff Trend Cycle to Trade Smarter

Your capital may be at risk. This material is not investment advice.

Do you dabble in investments? Maybe you’re a serious and dedicated trader? No matter what kind of trader you are, if you want to be smarter and bolder you look for the trading tools and platforms that can help you the most.

The Schaff Trend Cycle is the tool you might want to know about, and it has some unique characteristics you need to be aware of. It helps you identify market trends early on in trade evolutions. Its very function is designed to help improve your trading intelligence so you can make more lucrative trades.

That’s because the Schaff Trend Cycle (STC) uses an indicator that’s based on the assumption that currency trends have cyclical patterns. The acceleration and decelerations of prices have patterns that can reflect dominant currency cycles in any time frame. The information below will help you learn about the uses and benefits of the Schaff Trend Cycle for your trading purposes.

Cycle of Trading

Any time there’s a new company, product, or service which lights the imagination of the masses, investors respond by buying shares in almost bulk loads. The result is a drive that will raise prices. The drive can also quickly turn into overbought conditions.

It doesn’t matter how special the stock is or the product behind it once it hits overbought conditions; the share price will start to decline.

If you reverse the above scenario you have the definition of oversold shares.

That’s when everyone decides last year’s hottest service or product is no longer golden, and they start dumping their holdings. Once enough people do it, the conditions become more and more oversold. The stock supply is no longer viable because there are fewer shareholders who want to sell.

So when there’s buying, the price gets pushed up higher and higher. That may be too simple of a trading cycle explanation, but you should know the start point for the following expected timeline that follows.

Expected Share Cycles Using RSI

The RSI stands for the relative strength index. It is a trend tool that’s used so traders have a way to predict share cycles. The RSI is consistent for letting you know:

  • You could move any of your oversold shares at higher rates within weeks if you waited
  • Overbought shares almost always fall in price
  • There are ways you can check stock situations in an effective and efficient manner

What if there was a way within a matter of seconds or clicks you could figure out oversold shares, overbought shares, and anything in-between? The Schaff Trend Cycle (SCT) is a platform that can be used for making these fully informed decisions in trading.

Using the Schaff Trend Cycle

There are all kinds of trading platforms and tools available online. Some of these platforms are built-in with technical indicators to help you. Picking the right one that works for you best can seem like an insurmountable task.

But as a trader, STC is a platform you should be familiar with. STC can detect up and downtrends long before the convergence/divergence (MACD). The STC indicator uses Exponential Moving Averages (EMAs) but adds the cycle component to gauge more accurate currency trends.

Then the whole thing is factored into the STC indicator, which is more precise in the information you draw down from it. It is this reliable input that sets it apart from the MACD. But you should also note that STC does work better in faster-moving markets.

Wave Trend Oscillator

STC runs a typical oscillator-type indicator that helps you identify positive and negative trends. One of the things that make the STC calculated double-smoothed stochastic MACD so unique is the oscillator output moves between 1 and 100. In most cases, the oscillator moves up or down based on the acceleration up or downtrend.

But the STC can still give indications to you about oversold conditions by falling below 25. It can also show the overbought conditions when it comes down from above 75. The STC uses these specific and targeted input parameters.

Input Parameters for STC

STC uses the following Input Parameters:

  1. Parameter for Fast Length – number of bars used calculating the MACD fast moving average.
  2. Parameter for Slow Length – number of bars used calculating the MACD slow moving average.
  3. Parameter d Period – number of bars used calculating the stochastic Fast D component calculation.
  4. Parameter k Period – number of bars used calculating the stochastic Fast K component calculation.
  5. Parameter entitled Overbought – describes the overbought average.
  6. Parameter entitled Oversold – describe the oversold average.
  7. Parameter of average type – is the moving average of calculations that use Simple, Hull, Weighted, or Wilder.

You may recognize STC as a MACD with its use of cycles since cycles are so vital to predicting global financial markets. One of STC’s core intents is to help you notice any positive or negative trends.

How Does STC Help Improve Your Trading?

The first thing the STC provides for you as a trader is a user-friendly interface. STC gives you a very intense lens into your trading’s pinpoint entry and exit points. It does everything but buy and sell for you by providing you with the buy and sell signals.

MACD is great, but STC takes it one step further and deeper. STC as a trading platform incorporates a 23-50 period EMA cycle component. The 23-50 period EMA cycle component uses a 10-period signal line.

Brokers and Services

Now you know how the Schaff Trend Cycle works and what it brings to traders. There are groups that use STC and other bold and bright platforms to help grow and develop. After all, there are many websites out there dedicated to giving you comparisons of various brokers, platforms, and services.

IQ Option services aren’t one of the many—they are at the top of the many. Even though IQ Option has only been operating in South Africa for four years, they’ve already broken a lot of standing trade records.

If you think you’re ready to become a top trader, please go read our reviews. Learn more about South Africa’s IQ Option 92% prediction rate and then pick up the phone or click a link to reach out to us.

Author info:
The Hoth
Author: Kungawo
Kungawo is from: South Africa, Cape Town
Please be advised that certain products and/or multiplier levels may not be available for traders from EEA countries due to legal restrictions