The stochastic oscillator indicator is often used to check for overbought and oversold state when analyzing a currency pair or any other trading instrument. In many cases, it can be also serve as a trigger for orders. Below you can download a free expert advisor for MetaTrader 4 that uses the stochastic oscillator for entry and exit signals.
The type of moving average used for the signal line is a simple moving average.
In the following image you can see examples of Entry and Exit Signals, however this may not be accurate as the Stochastic drawn is with close prices.
Backtesting this expert advisor on the EUR/USD @ 15-minute timeframe shows that the Expert Advisor is very lossy. The EA is, in fact, limited by the use of only one indicator. This isn't enough to establish accurate entry points. The situation does not become profitable in other timeframes and it isn't suggested to use this EA on a real trading account.
The expert advisor works well only in case of a clear overbought or oversold situation that triggers a trend reversal.
The stochastic oscillator alone is insufficient to determine correct entry and exit signals. It should be integrated with other indicators.
The example chart screenshot below shows a series of three losses in a row generated by this EA:
Although it couldn't be recommended for the use in a live account, this expert advisor can be used as a foundation for further development and optimization. You need to understand that it is not profitable on its own because it is affected too strongly by false reversals.
This expert advisor is free to download and you can use its .mq4 source file to develop your own EA's.
Or you can read a more detailed instruction on how to perform the installation.
If you are interested in building your own expert advisor or knowing more about how to do it, check our MT4 Expert Advisor Template.
You can open a trading account with any of the MT4 Forex brokers to freely use the presented here expert advisor for MetaTrader 4.