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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.