Stochastic %K/%D Cross in Extreme Zones Strategy Diagram
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A crossover of the two Stochastic lines is a common but noisy signal, so this diagram accepts it only where it means something: a bullish cross has to happen while %K is still in the oversold zone, a bearish one while %K is still overbought. Every accepted signal reverses the position, so the diagram is either long or short and never merely waiting.
Strategy Overview
- One Stochastic Oscillator block supplies both lines; converter blocks split its value into %K and %D.
- A crossing block compares the two lines: its signal marks a bullish cross, and the same signal inverted by a NOT block marks a bearish one.
- The zone filter is a plain comparison of %K against the oversold and overbought constants, so a cross in the middle of the range is ignored.
- The order volume is the base volume plus the absolute value of the position, which closes the opposite side and opens the new one with a single market order.
- The diagram uses no RSI and has no stop loss.
- It works on five-minute candles to match the packaged sample history.
Entry and Exit Rules
- Long entry: %K crosses above %D while %K is below the oversold level and the position is not already long. The order buys the base volume plus any open short, which reverses the position into a long.
- Short entry: %K crosses below %D while %K is above the overbought level and the position is not already short. The order sells the base volume plus any open long, which reverses the position into a short.
- Exit: There is no separate exit block: the position is held until the opposite cross appears in the opposite zone, and that order both closes the old trade and opens the new one.
Parameters
| Parameter | Default | Description |
|---|---|---|
| %K Length | 14 | Lookback of the Stochastic %K line. |
| %D Length | 3 | Smoothing length of the %D line, the moving average of %K. |
| Oversold | 20 | Level below which a bullish cross is accepted as a buy. |
| Overbought | 80 | Level above which a bearish cross is accepted as a sell. |
| Volume | 1 | Base order volume, in lots; the reversal adds the open position on top of it. |
| Candles | 00:05:00 | Candle time frame the whole diagram works on. |
Diagram Details
- The candle block feeds a single Stochastic Oscillator, and two converter blocks read the %K and %D lines out of its value.
- The crossing block fires only on the candle where the lines swap places, which is what keeps the diagram from trading every bar the lines are apart.
- Each logical AND joins the cross, the zone comparison and a position check before triggering a position modify block.
- A formula block adds the base volume to the absolute value of the position and feeds both order blocks, so one market order performs the whole reversal.
Usage
Import the .json file into Designer, run it in the backtester on historical data, then adjust the parameters or the blocks themselves to fit your instrument before trading it live.