The Schaff Trend Cycle (STC) indicator for cTrader is a cyclical oscillator designed to identify trend direction changes quickly and accurately. It is calculated by applying a stochastic process over another stochastic process, both derived from the MACD line and adjusted using market cycles.
The result is a highly responsive oscillator that reacts quickly to market changes while remaining smooth and stable during trending conditions, avoiding the choppiness commonly seen in traditional oscillators.
The Schaff Trend Cycle was developed by Doug Schaff, based on the idea that currency trends accelerate and decelerate in repeating cycles. The algorithm was publicly released in 2008 and has since become a popular tool for identifying trend reversals and momentum shifts.
How the Schaff Trend Cycle Works
The STC indicator combines two well-known technical analysis methods:
- MACD, which measures trend direction and momentum
- Smoothed stochastic oscillators, which help identify overbought and oversold conditions
By merging these approaches, the Schaff Trend Cycle provides earlier and more reliable trend signals compared to standard oscillators.
The indicator value fluctuates between 0 and 100, using two key trigger levels:
- 25 – Oversold zone
- 75 – Overbought zone
Optional visual and notification alerts are available to help traders react to signals in real time.
Input Parameters
Main Settings
- MAShort (default: 23)
The period of the fast moving average used in the MACD calculation. Must be lower than MALong. - MALong (default: 50)
The period of the slow moving average used in the MACD calculation. Must be higher than MAShort. - Cycle (default: 10)
Defines the cycle length in chart periods. Since two stochastic calculations are applied, the effective cycle length is doubled.
Alert Settings
- ShowArrows (default: false)
Displays arrows above or below price bars when a signal is generated. - UpColor (default: Blue)
Color of the bullish signal arrow. - DownColor (default: Red)
Color of the bearish signal arrow. - ShowAlerts (default: false)
Displays an on-screen alert when a signal occurs. - SoundAlerts (default: false)
Plays a sound alert on signal generation. - EmailAlerts (default: false)
Sends an email notification when a signal is triggered. - PushAlerts (default: false)
Sends a push notification to your device when a signal appears.
Trading Strategy Example
The simplest and most common way to use the Schaff Trend Cycle indicator is:
- Buy when the indicator rises above the 25 level
- Sell when the indicator drops below the 75 level
To reduce false signals, Doug Schaff recommends an additional confirmation method:
- For a buy signal, the candle following the trigger bar should close above the high of the trigger bar.
- For a sell signal, the candle following the trigger bar should close below the low of the trigger bar.
The trigger bar is defined as the candle formed when the Schaff Trend Cycle crosses above 25 or below 75.
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