The Schaff Trend Cycle Indicator was created by Doug Schaff who developed this indicator to help traders and investors identify potential trend reversals and trend cycles in financial markets. The Schaff Trend Cycle is designed to improve upon traditional momentum oscillators like the MACD (Moving Average Convergence Divergence) and provide a smoother representation of price trends.
Nonlag Schaff Trend Cycle Variation
This variation of the standard STC indicator is calculated using MACD, which uses a faster non-lagging Moving average that makes the indicator react faster to market changes. It also uses a smoothed stochastic.
Exponential Moving Average (EMA)
The STC indicator uses two exponential moving averages which are a fast EMA and a slow EMA, these moving averages are typically calculated over a user-defined period, such as 23 and 50.
Moving Average Convergence Divergence (MACD)
The MACD is calculated based on the difference between the fast and slow EMAs which helps gauge the momentum of the trend.
Signal Line
A signal line is applied to the MACD to smooth out the indicator and generate more precise signals.
Stochastic Oscillator
The stochastic oscillator is used to identify overbought and oversold conditions, it will measure the current closing price relative to a specified price range over a given period.
Cycle Component
This is the heart of the Schaff Trend Cycle indicator where Its complex formula incorporates the MACD, stochastic oscillator, and EMA values to generate the cycle component. This component is designed to provide signals for trend reversals and continuations.
How to Use the STC Indicator?
The Schaff Trend Cycle (STC) indicator provides buy and sell signals for trading and also helps identify market trends, the buy and sell points are usually set at 25 levels upward (buy) and 75 levels downward (sell).
Buy Signal: When the STC line crosses above the centerline or the stochastic oscillator exits the oversold region, it may be a signal to go long (buy).
Sell Signal: When the STC line crosses below the centerline or the stochastic oscillator exits the overbought region, it may be a signal to go short (sell).
Indicator Settings Explained
When you attach the indicator to a chart or edit the indicator settings, you will have various adjustments you can make.
- User Guide - This displays a popup on the chart with a button that will take you to this page for help.
- Fast Length - The period for the fast-moving average used in calculating the indicator.
- Slow Length - The slow-moving average period.
- STC Period - The stochastic oscillator period value.
- MACD Price - The price type used to calculate the MACD. (0-6)
- Interpolate - Adjust the indicator to a current time frame and select whether the indicator forms in step or smooth when using multiple timeframes.
- Multi-Colour - Set whether to use different colours for different trend directions and price changes.
Types of Alerts
This indicator will send different types of alerts when there is a bullish or bearish signal:
- Pop-up message to the screen.
- Audible sound.
- Email message alert.
Need Telegram Alerts Added?
If you need to receive a Telegram alert when there is a trade signal, contact us.
Important Information
As with all technical indicators, use this indicator in conjunction with other indicators and your manual strategy as a confirmation, there are too many variables in the market to trade with a single indicator. Use your current trading skills to analyse what is happening in the markets before making a decision to open, close or modify a trade.
How To Install & Remove
First, make sure you have the cTrader trading platform installed and then unzip the file and double-click on it to automatically install it onto the platform.
Any Questions?
If you have any questions or if there are any bugs, please first search our product help forum for the answer, if you cannot find it, post a new question.
Need a Broker
If you are still looking for a broker you can trust, take a look at our best cTrader broker site.
