Stochastic Failure Swing Strategy

The Stochastic Failure Swing monitors the oscillator for a lower high above 80 or a higher low below 20. When the indicator fails to reach a new extreme and then reverses, it often signals a trend shift.

Testing indicates an average annual return of about 70%. It performs best in the stocks market.

The strategy buys when a higher low forms below 20 and %K crosses back above %D, or sells when a lower high occurs above 80 and %K crosses under.

Trades employ a small percent stop and close when the stochastic crosses back through the prior swing level.

Details

• Entry Criteria: indicator signal
• Long/Short: Both
• Exit Criteria: stop-loss or opposite signal
• Stops: Yes, percent based
• Default Values:
  • CandleType = 15 minute
  • StopLoss = 2%
• Filters:
  • Category: Reversal
  • Direction: Both
  • Indicators: Stochastic
  • Stops: Yes
  • Complexity: Intermediate
  • Timeframe: Intraday
  • Seasonality: No
  • Neural networks: No
  • Divergence: No
  • Risk level: Medium