Back to Docs
T
Traderoid

STC Node

Schaff Trend Cycle

IndicatorTrendOscillator

Overview

STC (Schaff Trend Cycle) applies double-smoothing to MACD through a stochastic function, creating a cycle-based momentum oscillator. It combines trend (MACD) with stochastic scaling, resulting in an indicator that identifies trend direction while measuring overbought/oversold conditions within those trends. The cycle detection makes reversals visible as the indicator bounces between preset levels.

Unlike MACD which is unbounded, STC outputs 0-100 scale, making it easier to identify extremes. The double-smoothing creates cleaner turning points while the stochastic scaling ensures consistent signals across different market conditions. Excellent for timing entries in trending markets and catching reversals early.

Formula

STC combines MACD with stochastic scaling:

1. Calculate MACD
MACD = EMA(12) - EMA(26)
Standard MACD calculation
2. Smooth MACD Twice
FirstSmooth = EMA(MACD, 15) SecondSmooth = EMA(FirstSmooth, 15)
Double exponential moving average smoothing
3. Apply Stochastic Scaling
Highest_High = Highest(SecondSmooth, 25) Lowest_Low = Lowest(SecondSmooth, 25) STC = 100 * (SecondSmooth - Lowest_Low) / (Highest_High - Lowest_Low)
Scale smoothed MACD to 0-100 range
Interpretation
STC above 75: Strong uptrend, potential overbought
STC below 25: Strong downtrend, potential oversold
STC 25-75: Transitional/ranging zone
Rising STC: Trend strengthening
Falling STC: Trend weakening to reversal possible

Parameters

ParameterTypeDefaultDescription
fastnumber12Fast EMA period for MACD.
slownumber26Slow EMA period for MACD.
sourceNodeAutoThe root data source node.

💡 Tip: STC standard parameters (12/26/15/25) work well across timeframes. Fast 5/13 for aggressive trading. Slow 15/30 for longer-term trends. Key insight: cycle nature means STC bounces, don't wait for extremes.

Common Use Cases

1. Cycle-Based Reversals

STC bounces between extremes in cycles. When hitting 75+ then turning down = early reversal warning. When hitting 25 or lower then turning up = bounce opportunity. Cycle nature makes reversals predictable vs continuous MACD line.

2. Trend Confirmation

STC above 50 = bullish trend mode. STC below 50 = bearish trend mode. Mid-50s = transitional. Use this for strategy selection. Trending systems in STC above 50, counter-trend systems in STC below 50 improves win rate dramatically.

3. Entry Timing in Trends

Pullback in uptrend: wait for STC to bounce above 25-30 (confirming pullback ended). Then enter. Pullback in downtrend: wait for STC to fall below 70-75. Double confirmation improves entry placement and reduces whipsaws.

4. Divergence Detection

Price makes new high but STC makes lower high = bearish divergence. Cycle-based nature makes divergences very clear visually. Price makes lower low but STC makes higher low = bullish divergence. Early reversal signal.

Advantages & Limitations

✓

Advantages

  • 0-100 bounded, easy to interpret
  • Cycle detection shows reversals clearly
  • Double-smoothing reduces noise
  • Excellent for trend confirmation
  • Clear divergence signals
!

Limitations

  • Complex calculation (double smoothed)
  • Lags during sharp reversals
  • Can get stuck in extremes in strong trends
  • Needs price action confirmation
  • Not useful alone without context

Tips & Best Practices

💡 Use for Strategy Switching

STC above 50 = use trend-following rules. STC below 50 = use mean-reversion rules. Auto-switch improves results vs trading same way in all conditions. Cycle-based nature makes transitions very clear.

📊 Wait for Cycles to Complete

When STC hits extreme (75+), don't immediately fade. Wait for it to turn and move away from extreme. 2-3 bar turn = weak reversal. Larger turn below 50 = strong reversal confirming.

⚡ Cycle Amplitude Shows Trend Strength

When STC bouncing 10-90, strong trend. When bouncing 40-60, weak trend. Amplitude changes alert you to trend strength changes before price confirms.

⚠️ Don't Trade Mid-Cycle Zone

STC in 40-60 range (transitional) = lowest probability area. Wait for clear break above/below 50 for directional trade. STC extremes are where the real signals are.

Example Strategy

STC cycle trading strategy for trends:

STC Cycle Breakout Trade

1Setup Phase

  • STC bottoms near 25 in downtrend
  • About to complete down-cycle
  • Waiting for bounce to confirm bottom

2Entry Signal

  • STC crosses above 30 (cycle turning up)
  • Price breaks above recent support
  • Enter long position on breakout

3Exit Condition

  • STC reaches 75 (cycle extreme)
  • Price weakness with STC divergence
  • Or take profits at 4-6% gain

4Risk Rules

  • Stop below recent low (cycle fails to work)
  • Only trade when STC clearly below 50 (downtrend) or above 50 (uptrend)
  • Risk 1.5-2% per trade

Related Nodes

MACD

Base component of STC calculation.

Stochastic

Stochastic scaling component used in STC.

RSI

Complementary momentum oscillator.

Trend Indicators

Combine with moving averages for strategy switching.

Back to DocumentationView All Momentum Indicators →