Knowledge of current economic events is a fundamental element of effective trading. In the case of currency pairs and indices, the ability to use the calendar is already satisfactory. Nevertheless, to assess market sentiment, it is worth following current events. In the case of instruments such as shares, tracking information from companies is a necessity.
Schaff Trend Cycle (STC) Oscillator
What is the Schaff Trend Cycle Oscillator?
The Schaff Trend Cycle (STC) oscillator is an advanced technical analysis tool developed by Douglas Schaff. It is a momentum indicator that combines elements of the exponential moving average (EMA) and cycle times to more accurately identify trends and their changes. The STC is designed to respond faster to trend changes than traditional indicators such as the MACD (Moving Average Convergence Divergence).
What is the STC Used For?
The primary purpose of the Schaff Trend Cycle oscillator is to identify market trends and signal entry and exit points for positions. STC helps in:
Determining the start and end points of trends.
Detecting buy and sell signals based on market cycles.
Providing early signals of trend direction changes.
How is the STC Calculated?
Calculating the STC is a multi-step process that involves using exponential moving averages and cycle times. Here is a simplified process:
Calculate the 12-period and 26-period exponential moving averages (EMA).
Calculate the MACD based on these EMAs: MACD=EMA12−EMA26MACD=EMA12​−EMA26​
Calculate the 9-period EMA of the MACD, known as the "signal line": Signal_Line=EMA9(MACD)Signal_Line=EMA9​(MACD)
Calculate the MACD cycle, which is the oscillation of the MACD around the signal line:…
