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The Schaff trend cycle indicator is an indicator which combines the common indicators, MACD & Stochastic. The benefit of the Schaff trend cycle is that it is meant to be a fast indicator and more importantly quicker than the standard macd and stochastic.

The indicator uses similar methods to a MACD i.e uses exponetial moving averages but applies a cycle factor to them. Then the price is smoothed using a mofidied Wilders smoothing algorithm.

It is still a relatively new indicator. The Schaff trend cycle Indicator has only been around since the 90s when it was brought to the forefront of trading indicators by Doug Schaff, although cycle indicators have been around for a long while. Naturally the creation of the internet and online trading and platforms like Metatrader 4 (Mt4) have help cycle indicators become more popular. Trying to calculate cycle prices on a real time basis, intraday, is very hard so a metatrader indicator such as this makes the job simple.

The Schaff Trend Cycle metatrader indicator on my chart shows the standard settings on a 1 hour GBPUSD chart. The default settings are:

-Exponential Moving Average Short. Default: 23

-Exponential Moving Average LongDefault: 50

-Cycle: Default: 10

These can all be change, however, in your custom indicator settings box for the indicator.

The aim of the Schaff trend cycle indicator is to spot clear trends and to try and mark the various tops and bottoms within a trend.

The basic trend is as you would think. When the Schaff Trend Cycle Indicator is declining the trend is declining and when the it is rising the trend is rising. The best way to trade this is to apply lines at 25 and 75 to the indicator and watch for moves from below to above the 25 and from above and below the 75 levels. You will see how less choppy it is compared to say an ma crossover or a macd signal cross. You can also trade it by slop. i.e if the line is sloping up buy and sell on a downslope. There are several colour changing indicators for a change in direction of the cycle line in our download section. (However I would suggest that you try them all side by side and decide which one you like best. As all these indicators have been coded by different people they arent all created equal.)

Some say it is a leading indicatorI am not so sure. I would say it filters price very well so it looks like it is leading but ultimately it represents prices that have already happened. It is definitely worth a look and play with. Seems to be most commonly used on forex trading systems and obviously on the metatrader plaform. You can download the mt4 indicator below for free.

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Schaff Trend Cycle Metatrader Indicator

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