Stochastic 20/80 Reversion

The claim

Stochastic %K under 20 means oversold, over 80 means overbought. Predates RSI and is taught nearly as often.

Where it comes from

George Lane popularized the stochastic oscillator in the 1950s. The 20/80 thresholds are the standard textbook setting.

The exact rule we graded

Long while %K(14) < 20, short while %K(14) > 80, on 1-hour candles. Exits: 2.5% stop, 3% target, 48-bar time exit.

• ✕OOS net expectancy > 0
• ✕Clears the cost hurdle
• ✕Robust, not lucky
• ✕Survivable drawdown
• ✓Not overfit

The backtest above is history. Since publication, this exact spec also runs in our nightly forward-test harness (the same one behind /forward-tests): only trades entered after publication count, open positions are never force-closed, and the record publishes either way.

No closed forward trades recorded yet — the record accrues nightly as trades complete their full exit windows.

Honest port notes

• Lane's full method wanted %K/%D crossovers plus divergence; the threshold version is what the textbooks reduced it to, and it's what we graded.

{
  "name": "Stochastic 20/80 Reversion",
  "universe": [
    "BTC/USDT:USDT",
    "ETH/USDT:USDT",
    "SOL/USDT:USDT",
    "BNB/USDT:USDT",
    "XRP/USDT:USDT",
    "DOGE/USDT:USDT",
    "LINK/USDT:USDT",
    "AVAX/USDT:USDT"
  ],
  "risk": {
    "risk_per_trade_pct": 1,
    "leverage_cap": 3,
    "max_daily_loss_pct": 5,
    "max_dd_halt_pct": 25
  },
  "sleeves": [
    {
      "name": "main",
      "timeframe": "1h",
      "entry": {
        "type": "rule",
        "logic": "all",
        "long": [
          {
            "indicator": "stoch",
            "period": 14,
            "op": "<",
            "value": 20
          }
        ],
        "short": [
          {
            "indicator": "stoch",
            "period": 14,
            "op": ">",
            "value": 80
          }
        ]
      },
      "exit": {
        "stop_loss_pct": 2.5,
        "take_profit_pct": 3,
        "time_exit_bars": 48
      }
    }
  ]
}