Stochastic Cross in Extreme Zone

Entry Logic

• Exact Entry Trigger: Enter long when %K crosses above %D in the oversold zone (below 20). Enter short when %K crosses below %D in the overbought zone (above 80).
• Confirmation: Wait for the stochastic lines to exit the extreme zone.
• Timeframe: 5-minute, 15-minute.
• Market Condition: Ranging.

Exit Logic

• Profit Targets: Target the 50 level on the stochastic indicator, or the other extreme zone.

Stop Loss Structure

• Hard Stop: Place stop beyond the recent price extreme.

Risk Management Framework

• Risk Per Trade: 0.5% of account capital.
• R:R Requirement: Minimum 1.5:1.

Position Sizing Model

• Sizing Approach: Fixed fractional.

Trade Filtering

• Market Conditions to Avoid: Strong trending markets.

Context Framework

• Range Location: Longs at the bottom of the range, shorts at the top.

Trade Management Rules

• Breakeven: Move stop to breakeven after a 1R move.

Time Rules

• Optimal Window: During periods of low volatility and clear range-bound action.

Setup Classification

• A+ Setup: The cross occurs at a well-defined support or resistance level.

Market Selection Criteria

• Instruments: Range-bound stocks and forex pairs.

Statistical Edge Metrics

• Win Rate: 60-70%.
• Profit Factor: 1.4.
• Expectancy: 0.2R.

Failure Conditions

• Strategy Fails: When the market breaks out of its range.

Psychological Rules

• Discipline: Trust the extreme readings and avoid fading strong trends.

Advanced Components

• Filters: Use Bollinger Bands to confirm the range.

Location

• Strongest: In a sideways market with clear boundaries.