Stochastic %K/%D Cross from Oversold¶
What it does: Buys a Stochastic turn-up from oversold while the 4-hour trend is up. The Stochastic oscillator shows where the price sits in its recent range (0-100). This buys when its fast line (%K) crosses above its slow line (%D) below 20, while the price is above the 4-hour 50-candle average.
Style: Mean reversion · Difficulty: Beginner · Risk: medium · Ready: 2 of 2 variants
When people use it: It tends to work on pullbacks inside uptrends.
Where it struggles: It struggles in strong trends where the Stochastic stays pinned at one end, and in ranges where the 4-hour average is falling.
Markets it was written for: BTC, ETH, majors. Timeframes: 1h with 4h filter.
Open it in the Strategy Library (on the Strategies page), pick a variant, adjust the settings and press Add to my strategies. It becomes your own strategy: edit, backtest or trade it like any other.
Long¶
Buys a Stochastic turn-up from oversold while the 4-hour trend is up.
Labels: Mean Reversion, Long, Spot, Beginner, Medium
- Direction: Buy (long) · Market: spot
- Trigger: On candle close · Main timeframe: Auto (1h)
Entry
- IF Stoch(14,3,3) %K crosses above Stoch(14,3,3) %D (1h) and Stoch(14,3,3) %K < 20 (1h) and Price > EMA(50) (4h)
Exit: Indicator-Based Exit
- IF Stoch(14,3,3) %K crosses below Stoch(14,3,3) %D (1h) and Stoch(14,3,3) %K > 80 (1h)
- Loss controls: Stop-loss % 3%, Break-even stop after % 1.5%
Settings
| Setting | Default | Editable | What changing it does |
|---|---|---|---|
| %K length | 14 | Yes (sets 6 fields) | How many candles the Stochastic looks back. Shorter makes it jumpier (more signals); longer makes it calmer. Changes entry and exit. |
| %D smoothing | 3 | Yes (sets 6 fields) | Smoothing of the slow line. Lower gives more crosses; higher gives fewer. |
| Slowing | 3 | Yes (sets 6 fields) | Extra smoothing of %K. Higher means fewer, later signals. |
| Oversold level | 20 | Yes | How low the Stochastic must be for a buy. Higher (closer to 30) trades more often; lower waits for deeper dips. |
| 4h trend average | 50 | Yes | It only trades on the trend side of this 4-hour average (buys above it; the short version shorts below it). Shorter allows trades sooner; longer is stricter. |
How it works (as shown in the app)
- The Stochastic oscillator shows where the price sits in its recent range (0-100). This buys when its fast line (%K) crosses above its slow line (%D) below 20, while the price is above the 4-hour 50-candle average.
- It sells when %K crosses below %D above 80, or at the stop-loss; after a 1.5% gain the stop moves to your entry price.
- It tends to work on pullbacks inside uptrends.
- It struggles in strong trends where the Stochastic stays pinned at one end, and in ranges where the 4-hour average is falling.
- Trades on 1-hour candles, so fees matter.
Short (perp)¶
Shorts a Stochastic turn-down from overbought while the 4-hour trend is down.
Labels: Mean Reversion, Short, Futures, Medium, Backtest Only
- Direction: Sell (short) · Market: swap
- Trigger: On candle close · Main timeframe: Auto (1h)
Entry
- IF Stoch(14,3,3) %K crosses below Stoch(14,3,3) %D (1h) and Stoch(14,3,3) %K > 80 (1h) and Price < EMA(50) (4h)
Exit: Indicator-Based Exit
- IF Stoch(14,3,3) %K crosses above Stoch(14,3,3) %D (1h) and Stoch(14,3,3) %K < 20 (1h)
- Loss controls: Stop-loss % 3%, Break-even stop after % 1.5%
Settings
| Setting | Default | Editable | What changing it does |
|---|---|---|---|
| %K length | 14 | Yes (sets 6 fields) | How many candles the Stochastic looks back. Shorter makes it jumpier (more signals); longer makes it calmer. Changes entry and exit. |
| %D smoothing | 3 | Yes (sets 6 fields) | Smoothing of the slow line. Lower gives more crosses; higher gives fewer. |
| Slowing | 3 | Yes (sets 6 fields) | Extra smoothing of %K. Higher means fewer, later signals. |
| Overbought level | 80 | Yes | How high the Stochastic must be for a short. Lower (closer to 70) trades more often; higher waits for bigger rallies. |
| 4h trend average | 50 | Yes | It only trades on the trend side of this 4-hour average (buys above it; the short version shorts below it). Shorter allows trades sooner; longer is stricter. |
How it works (as shown in the app)
- The Stochastic oscillator shows where the price sits in its recent range (0-100). This shorts when its fast line (%K) crosses below its slow line (%D) above 80, while the price is below the 4-hour 50-candle average.
- It buys back when %K crosses above %D below 20, or at the stop-loss; after a 1.5% gain the stop moves to your entry price.
- It tends to work on bounces inside downtrends.
- It struggles in strong trends where the Stochastic stays pinned at one end, and in ranges where the 4-hour average is rising.
- Trades on 1-hour candles, so fees matter.
- Shorting means you profit if the price falls and lose if it rises.
- Suggested leverage is at most 5x. On isolated margin, at 5x the exchange closes the position (liquidation) if the price moves about 19.6% against you, and you lose the margin you put into it. Keep your stop well inside that.
- For now this version runs in backtests only; paper and live futures trading are coming later.
Warnings¶
- "Backtest only for now: paper and live trading of shorts are coming later.": shown on short variants. They need perpetual or futures pairs.
- Some variants suggest leverage. On isolated margin a liquidation loses the margin in that position; keep any stop well inside the liquidation distance (the Trade Builder warns you when it isn't).
- Once added, the strategy's conditions get the usual condition checks. Messages show under each condition on the entry / exit conditions screen; setting errors start with the indicator's short name (for example "MACD: Fast must be between 1 and 1000") and block saving, while the other warnings never block saving and repeat in the strategy's Entry or Exit section. See the indicator pages below for each one.
- "You already have this strategy with these settings (…). Change a setting to add another copy.": shown on the variant's page in the Strategy Library when you already added this variant with the same settings.
Good to know¶
- After you add it, the strategy keeps the library's trigger and an Auto main timeframe; you can change both in the builder. Nothing links it back to the library, except that the builder still shows the library's explanations in the info bubbles.
- Changing a setting before adding it also changes the saved name, so you can tell copies apart.
- Past results don't predict future ones. Try it in a backtest and on paper before using real money.
- Indicators used: EMA, Stoch.