The strategy reacts to extreme levels of the Stochastic Oscillator. When the %K line dives into oversold territory the system expects a bounce, whereas overbought readings can foreshadow a drop. The method runs on short intraday candles so signals arrive quickly.
After subscribing to the selected timeframe it monitors the %K and %D lines. A bullish setup forms when %K falls below 20 and then begins to recover. Conversely, a bearish setup appears if %K rallies above 80 and starts to turn down. A fixed percent stop controls risk for either side.
Positions are exited when the %K line crosses back through the 50 level, signaling momentum has shifted toward the opposite direction. Because stops scale with the latest ATR, the trade size adapts to volatility.
- Entry Criteria:
- Long: %K < 20 with a bullish turn.
- Short: %K > 80 with a bearish turn.
- Long/Short: Both.
- Exit Criteria: %K crossing 50 or stop-loss.
- Stops: Yes, at 2% distance.
- Default Values:
- StochPeriod = 14
- KPeriod = 3
- DPeriod = 3
- CandleType = 5 minute
- Filters:
- Category: Oscillator
- Direction: Both
- Indicators: Stochastic
- Stops: Yes
- Complexity: Basic
- Timeframe: Intraday
- Seasonality: No
- Neural networks: No
- Divergence: No
- Risk level: Medium