Trading strategy: KST - Martin Pring
Description
The KST trading strategy is based on the KST indicator developed by trader Martin Pring. This strategy combines EMAs (exponential moving averages) and ROCs (rates of change). An analysis of the market trend is done on the basis of three different charts. KST can be used either for day trading or swing trading based on the time frames chosen for these three charts.
| Suitable for | : Market indices (FTSE, CAC, DAX ...) : Forex (EUR/USD ...) : Shares |
| Instruments | : Futures, CFDs and Forex |
| Trading type | : Day trading and Swing trading |
| Trading tempo | : Low to medium - Depending on the time frames |
| The strategy | : Video |
| Using NanoTrader Full | : Manual or automated, video |
The strategy in detail
When to open a position?
Open 3 charts. Determine a combination of 3 related timeframes. Classic combinations are month-week-day, day-4h-1h and 4h-1h-15min. It is important to respect a factor of 3 to 8 between successive time frames. The concept of analyzing market in higher time frames whilst trading in lower time frames was first introduced by the famous trading author Dr Alexander Elder.
Let’s focus on the combination 4h-1h-15min. This combination is more suitable for day trading. Ad the KST indicator to both the 1-hour and 4-hour charts. The KST indicator can either be bullish or bearish. Then ad the Slow Stochastics to the 15-minute chart. The signals are generated by the Slow Stochastics in the 15-minute chart. A buy signal is only valid when both the KST charts are bullish. A short sell signal is only valid when both the KST charts are bearish.
In this example the KST indicator is bullish in both the 1-hour and 4-hour charts. Only buy signals are valid. Short sell signals are to be ignored.
The 15-minute chart shows that the fast stochastic (grey line) is about to cross the slow stochastic upwards. When this happens it is considered a buy signal. Given that the KST indicator is bullish in both the higher time frame charts, this buy signal can be acted upon.
When to close a position?
The position is closed when the next Slow Stochastics cross occurs. Traders with a preference for the ATR (average true range) can also use it to determine a target and a stop.
Conclusion
The KST strategy analyzes a potential trade in different time frames. Only when all time frames concur, a position can be opened in the direction of the trend. These are benefits. The strategy was developed by trader Martin Pring and can be used for day trading and swing trading.
Practical implementation
In NanoTrader Full follow these steps:
- Choose the instrument you wish to trade.
- Open a chart with the study "WHS MOMS".
- The strategy is set-up for position exits based on the Slow Stochastics.