Long Stochastic Crossover Strategy with ATR-Based Exits

Summary

This long-only strategy enters when the smoothed stochastic %K line crosses above %D while %K is below an oversold threshold. It prevents pyramiding and opens a position only when flat. Once a new position is detected, the script records the average entry price and ATR, then sets both the profit target and stop loss at the same ATR multiple on opposite sides of entry. These exit levels remain fixed for that trade and are reset when the strategy returns to flat.

The provided settings use a 14-period stochastic and ATR, smoothing for both stochastic lines, and a 1.5 ATR exit distance. The accompanying description says the approach was designed for daily candles but can be applied to other candlestick timeframes, and cautions that results vary by symbol. The document gives no backtest results, short-entry logic, transaction-cost assumptions, or evidence that the oversold crossover has an edge. The stated stochastic calculation uses price highs, lows, and closes, so it is a stochastic oscillator rather than Stochastic RSI despite the accompanying description’s label.

Key ideas

• A long entry occurs when smoothed %K crosses above %D while %K is below the oversold threshold.
• The strategy opens a position only while flat and does not pyramid.
• At entry, it fixes the stop and target at equal ATR multiples below and above the average entry price.
• Exit levels are cleared when the position closes, and the strategy does not define short trades.
• The description recommends testing across symbols and identifies daily candles as the original intended timeframe, but reports no results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.