The Schaff Trend Cycle Indicator for MetaTrader4 is a combination of slow stochastics along with the moving average convergence/divergence (MACD).
The result of this combination is an enhanced version of the oscillator that is void of choppiness during trends and responds to price action promptly.
The Schaff Trend Cycle Indicator was developed by Doug Schaff, who hold the assumption that forex trend accelerate and decelerate in cycles. The Schaff Trend Cycle Indicator algorithm became public in 2008.
The Schaff Trend Cycle Indicator tries to ensure that the hybrid conceived from the combination of the MACD and smoothed stochastic indicator offers a fine blend when determining changes in trend direction.
The MACD is known to be a trend indicator, although it is also known to be lagging in view of its slow reactive alert line. The enhanced signal line on the Schaff Trend Cycle indicator offers an early detection signal in spotting fx trends.
One of the easiest techniques that can be used on the Schaff Trend Cycle Indicator is to buy when it surges above the 25 level and sell when the signal line dips below the 75 level.
In order to be able to filter out false alerts, Doug Schaff, the creator of Schaff Trend Cycle offers the following method: for a bullish trend, the candle following the trigger candle should close above the high of the trigger candle; while for a bearish trend, the candle following the trigger candle should close below the low of the trigger candle.
The trigger candle in this case is the candle that is formed at the same time the STC spikes above/below the 25 or 75 level respectively.
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (MAShort, MALong, Cycle, BarsCount), Colors, width & Style.
Time frames: 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: momentum oscillator, trend cycle