Stochastic Oversold Bounce
Mean-reversion using Stochastic: buys below 20 and sells above 80, fading extremes within a range.
Entry Logic
Buy when Stochastic %K(14,3,3) falls below 20 — price near the recent low.
Exit Logic
Sell when %K recovers above 80 — price near the recent high.
How Rules Combine
%K measures close relative to 14-day high-low range, smoothed by 3 days. Below 20 means the close is in the bottom fifth of the range.
When It Works (Market Edge)
Range-bound markets where price oscillates within a channel and extremes mean-revert reliably.
When It Fails
Strong trends: stochastic can stay below 20 in a crash or above 80 in a rally for weeks — same oversight as RSI.
Common Myths
Myth: Stochastic below 20 guarantees a bounce.
Truth: In a downtrend stochastic stays below 20 while price keeps falling. Oversold is a condition, not a reversal proof.
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5Y Rankings
Performance across major assets, sorted by return.
| Asset | Total Return | Win Rate | Profit Factor | Max Drawdown | Avg Duration | Trades | Action |
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