Stochastic Oversold Entries with ATR-Based Exits

Summary

This long-only strategy enters when the smoothed stochastic %K line crosses above %D while %K remains below an oversold threshold. It allows one open position at a time. At entry, it records the average fill price and the ATR value, then places a take-profit limit and stop-loss at equal distances from entry, each set to 1.5 times that recorded ATR. The levels stay fixed for the position and reset when flat.

The document provides the indicator settings and script logic, but no performance results or backtest evidence. The author says it was originally designed for daily candles, can be used on other candle timeframes, and may not work on every symbol. The description calls the entry indicator Stoch RSI, although the supplied script calculates a stochastic oscillator from price rather than RSI; that distinction matters when reproducing or evaluating the method.

Key ideas

• A long entry occurs when smoothed stochastic %K crosses above %D below the oversold threshold.
• The strategy permits only one open position at a time.
• It sets both take profit and stop loss 1.5 entry-time ATRs from the average fill price.
• The author identifies daily candles as the original intended timeframe and cautions that results may vary by symbol.
• The description refers to Stoch RSI, while the script applies stochastic calculations directly to price.

Tags

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