Schaff Trend Cycle: A Stochastic Transformation of MACD

Summary

The Schaff Trend Cycle (STC) indicator applies two stochastic transformations and smoothing stages to a MACD series. It first subtracts a slow EMA from a fast EMA, normalizes that series over a cycle window, smooths it with an EMA, then normalizes and smooths again. The resulting value is bounded between 0 and 100. The supplied defaults use MACD lengths of 23 and 50, a cycle length of 10, and smoothing lengths of 3.

The indicator marks the lower and upper bands, defaulting to 25 and 75, and can highlight values outside that zone. Its signals identify a move upward through the lower band as a buy signal and a move downward through the upper band as a sell signal; the source also enters short on the latter signal. It includes plots and alert conditions, but gives no explanation of the indicator's empirical performance or risk controls. Published backtest settings specify BTC/USDT futures data over a limited period, without outcome statistics, so they do not establish signal quality or profitability.

Key ideas

• STC is built by applying two stochastic normalization stages and EMA smoothing to MACD.
• The indicator output is constrained to a 0–100 range, with default lower and upper bands at 25 and 75.
• Crossing above the lower band generates a buy signal, while crossing below the upper band generates a sell signal.
• The source enters long on the buy signal and short on the sell signal.
• The document provides configuration and backtest settings, but no performance results or risk-management rules.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.