STC indicator: how to use the Schaff trend cycle in trading

The STC indicator, short for Schaff trend cycle, is a technical indicator that builds on moving average convergence divergence (MACD) and aims to respond more quickly to changes in market momentum. It runs a MACD calculation through a stochastic process, then smooths the result into a single line that moves between 0–100.

This guide explains how the STC is built, what its settings mean, how traders read the 25 and 75 levels, and where the indicator can give less reliable readings.

Takeaways

The STC indicator, or Schaff trend cycle, was developed by currency trader Doug Schaff and published in 1999.
It combines MACD and stochastic logic, then smooths the result into a line that moves between 0–100.
Readings above 75 are often viewed as overbought, while readings below 25 are often viewed as oversold.
The common default setting is a 23 and 50 exponential moving average (EMA) pair with a cycle length of 10.
The STC is designed to turn earlier than MACD, which can also mean it gives more premature readings.
No indicator removes risk, and past performance is not a reliable indicator of future results.

What is the STC indicator?

The Schaff trend cycle (STC) is a momentum oscillator that looks at the pace and rhythm of a market’s trend. Instead of focusing only on whether price is moving up or down, it tries to show when momentum may be speeding up, slowing down or starting to turn.

The indicator was developed by Doug Schaff, a foreign exchange trader, and published in 1999. Schaff’s aim was to keep the trend-following qualities of MACD while reducing some of the lag that can come with slower indicators (Investopedia, accessed 2 July 2026).

At a glance:

STC feature	What it means
Indicator type	Momentum oscillator
Output range	0–100
Common settings	23, 50, 10
Main reference levels	25 and 75
Often used for	Cycle timing, momentum context and confirmation
Key limitation	Can give early or misleading readings, especially in fast or thin markets

The STC does not read the price directly. It first uses MACD, which is already based on price, and then applies a stochastic calculation to that MACD value. This means the STC can behave differently from simpler oscillators that work directly from price changes.

How is the STC indicator calculated?

The STC is built in three broad stages:

It calculates MACD using a fast and slow EMA.
It applies a stochastic calculation to the MACD value.
It smooths the result into a line between 0–100.

The simplified logic looks like this:

MACD = EMA(price, fast) − EMA(price, slow)

Stochastic of MACD = (MACD − lowest MACD over cycle) / (highest MACD over cycle − lowest MACD over cycle) × 100

STC = double-smoothed version of that stochastic, expressed as 0–100

In plain terms, the calculation first measures momentum by comparing a faster EMA with a slower one. It then checks where that momentum value sits within its recent range, in a similar way to how a stochastic oscillator checks where price sits within its own recent range.

Finally, the indicator smooths the result twice. This helps reduce some of the sharp moves in the line, although it does not remove false readings. The default parameters are widely quoted as a fast EMA of 23, a slow EMA of 50 and a cycle length of 10.

Past performance is not a reliable indicator of future results.

STC indicator example

A hypothetical worked example can help:

Step	Example
Current MACD value	4.00
Lowest MACD over the last 10 periods	1.00
Highest MACD over the last 10 periods	5.00
Raw stochastic calculation	(4.00 − 1.00) / (5.00 − 1.00) × 100
Raw result	75

After the two smoothing passes, the plotted STC line might settle below that raw figure, perhaps in the high 60s, because smoothing reduces the effect of sharp moves. The exact result depends on earlier values, which is why the STC line usually moves more gradually than the raw calculation.

Past performance is not a reliable indicator of future results.

How the STC indicator works in trading

The STC moves between 0 and 100, with traders often watching the 25 and 75 levels for context.

A move up through 25 may suggest upward momentum is building, while a move down through 75 may suggest it’s fading. Readings below 25 are often viewed as oversold, while readings above 75 are often viewed as overbought.

These labels shouldn’t be read too literally. Overbought doesn’t automatically mean price will fall, and oversold doesn’t automatically mean price will rise.

The shape of the line can also add context. A rising STC may suggest a more bullish short-term cycle, while a falling STC may suggest a more bearish one. Some traders also watch for the line to flatten or turn before it crosses a reference level.

In strong trends, the STC can stay near 0 or 100 for long periods. In these conditions, an extreme reading may point to trend strength rather than an immediate reversal.

Combining the STC with other indicators

Because the STC focuses on momentum and cycle timing, traders often pair it with tools that show something different. This can help avoid using several indicators that all repeat the same information.

Pairing	What the second tool adds	How traders may use the combination
STC and moving averages	Broader trend direction	Moving average for context, STC for timing
STC and the RSI	Direct price-momentum reading	Overlapping overbought or oversold context
STC and volume	Participation behind a move	Extra context around cycle turns
STC and support and resistance	Key price areas	Filtering STC readings around watched levels

Moving averages

A moving average can help define the broader direction, while the STC can provide timing context. For example, some traders look for an STC turn up through 25 while price holds above a rising average. In that case, the average frames the trend and the STC provides a possible timing window.

RSI

The relative strength index (RSI) measures the speed of price changes directly, while the STC reads MACD output. When both indicators reach overbought or oversold areas at the same time, some traders treat the overlap as added context rather than confirmation.

Volume

Volume can add context to an STC reading. A cycle turn with rising volume may be read differently from the same turn on thin participation, although volume behaviour varies by market and does not confirm an outcome.

Support and resistance

Mapping STC turns against identified support and resistance levels can help filter readings. For example, an oversold STC reading near a long-watched support area may carry more context for some traders than the same reading in the middle of a range.

Risk management with the STC indicator

No indicator removes the risk that comes with leveraged CFD trading, and the STC is no exception. Its early-turning design can be useful, but it can also create false starts. The line may turn, then quickly turn back, producing a reading that does not develop into a sustained move.

Key risks to keep in mind:

The STC can give premature readings.
It can stay near 0 or 100 during strong trends.
It may be less reliable in fast-moving or low-liquidity markets.
It is based on MACD, so it does not read price directly.
It should not be treated as a complete trading system on its own.

The same STC reading may have a different meaning in a quiet, range-bound market than it does during a fast, news-driven move. Many traders manage this by using the STC with a separate trend filter and by choosing position sizes that account for the possibility of misleading readings.

Some also use stop-loss orders to define risk in advance. Standard stop-loss orders are not guaranteed. Guaranteed stop-loss orders incur a fee if activated. Contracts for difference (CFDs) are traded on margin, leverage amplifies both profits and losses.

Common mistakes when using the STC indicator

STC indicator mistakes often come from treating its readings as fixed signals rather than context. Here are a few to watch for:

Treating extremes as reversals. a reading above 75 or below 25 doesn’t automatically mean the price will turn. In strong trends, the STC can stay at extremes for longer.
Ignoring the broader trend. Acting on every cycle turn can create counter-trend readings. Many traders check the wider trend first.
Over-tuning the settings. Adjusting the EMAs and cycle length to fit past price action can lead to curve-fitting. A setting that worked before may behave differently in future.
Using it in isolation. The STC can miss sudden price shocks, so traders often use it with price structure or another tool.

STC extremes aren’t automatic reversal points, and no single indicator removes trading risk. Past performance is not a reliable indicator of future results.

The STC indicator is one way to analyse momentum and potential cycle turns, but it isn’t a standalone trading signal. This content is for educational purposes only and doesn’t constitute investment advice or a recommendation to trade. Indicator readings can be early, delayed or unconfirmed by price, especially in fast-moving, low-liquidity or strongly trending markets.

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FAQ

Who created the STC indicator?

The Schaff trend cycle was developed by Doug Schaff, a foreign exchange trader, and published in 1999. Schaff designed it to keep the trend-following qualities of MACD while reducing some of its lag, by running the MACD output through a stochastic process and smoothing the result into a single line that moves between 0–100.

What are the default STC indicator settings?

The most widely quoted default uses a fast EMA of 23, a slow EMA of 50 and a cycle length of 10, often written as 23, 50, 10. Shorter values make the line more responsive but noisier, while longer values smooth it and may turn later. No single configuration is universally best, and many traders test settings on a demo account first.

What do the 25 and 75 levels mean on the STC?

A reading above 75 is generally considered overbought and a reading below 25 oversold. A move up through 25 is often interpreted as a possible start of an upward trend cycle, while a move down through 75 is often read as a possible start of a downward one. These are reference levels rather than automatic triggers, as the line can stay near an extreme during strong trends.

Is the STC better than the MACD?

The STC is designed to turn earlier than MACD because it adds a cycle calculation to MACD momentum. This can make it more responsive, but it can also lead to more premature readings. For that reason, it is not simply better or worse. Some traders use the STC for timing and MACD for a broader momentum view.