Stochastic %D (5, 3, 0, 3, 0)
The Stochastic %D (5, 3, 0, 3, 0) is a momentum oscillators indicator used in Skyrexio Strategy Builder for momentum analysis and overbought/oversold identification.
Introduction
The Stochastic %D (5, 3, 0, 3, 0) is a smoothed momentum oscillator that provides neutral directional bias for both LONG and SHORT opportunities. As a 3-period moving average of %K, it reduces noise and provides more reliable signals while maintaining sensitivity to overbought/oversold conditions.
How Stochastic %D Works
The Stochastic %D is a smoothed version of %K, calculated as a 3-period moving average of %K values. This smoothing reduces noise and provides more reliable signals. %D is often called the 'slow stochastic' and is used as a signal line.
β’ Signal confirmation - %D crossovers with %K provide trading signals β’ Trend smoothing - %D filters out short-term noise in %K β’ Overbought/Oversold confirmation - %D in extreme zones confirms %K signals β’ Momentum direction - Rising %D indicates bullish momentum, falling %D indicates bearish momentum β’ Reliability enhancement - Smoothing reduces false signals common in volatile markets
Key Characteristics
Category
Momentum Oscillators
Type
Smoothed Momentum Signal
Primary Use
Signal confirmation and noise reduction
Timeframe
All timeframes supported (1m to 1M)
Confirmation
%K crossovers, volume, trend context
Strategy Applications
π’ LONG STRATEGY (Smoothed Oversold Recovery)
Stochastic %D is neutral - use %K crossing above %D in oversold territory for LONG entries when smoothed momentum confirms upward reversal.
Base Entry Order (LONG)
Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Cross Above
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Additional Entry Orders (LONG)
Additional Entry 1: Oversold crossover confirmation
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 30
AND
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
OR
Additional Entry 2: Smoothed momentum acceleration
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Offset: 1
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
Take Profit Orders (LONG)
Rule 1: Exit condition - Overbought crossover reversal
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Cross Below
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
AND
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 70
OR
Rule 2: Exit condition - Smoothed momentum peak
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 80
OR
Rule 3: Exit condition - Volume divergence at highs
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
AND
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75
Stop Loss Orders (LONG)
Rule 1: Stop loss - Bearish crossover confirmed
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Cross Below
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
OR
Rule 2: Stop loss - Smoothed momentum breakdown
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 15
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Rule 3: Stop loss - Trend breakdown confirmation
First Condition: Close Price
Timeframe: 1H
Operator: Cross Below
Second Condition: Exponential Moving Average (50)
Timeframe: 1H
π΄ SHORT STRATEGY (Smoothed Overbought Reversal)
Stochastic %D is neutral - use %K crossing below %D in overbought territory for SHORT entries when smoothed momentum confirms downward reversal.
Base Entry Order (SHORT)
Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Cross Below
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Additional Entry Orders (SHORT)
Additional Entry 1: Overbought crossover confirmation
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 70
AND
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
OR
Additional Entry 2: Smoothed momentum deceleration
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Offset: 1
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
Take Profit Orders (SHORT)
Rule 1: Exit condition - Oversold crossover reversal
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Cross Above
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
AND
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 30
OR
Rule 2: Exit condition - Smoothed momentum trough
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 20
OR
Rule 3: Exit condition - Volume divergence at lows
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
AND
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25
Stop Loss Orders (SHORT)
Rule 1: Stop loss - Bullish crossover confirmed
First Condition: Stochastic %K (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Cross Above
Second Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
OR
Rule 2: Stop loss - Smoothed momentum breakout
First Condition: Stochastic %D (5, 3, 0, 3, 0)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 85
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Rule 3: Stop loss - Trend reversal confirmation
First Condition: Close Price
Timeframe: 1H
Operator: Cross Above
Second Condition: Exponential Moving Average (50)
Timeframe: 1H
Advanced Strategy Combinations
Smoothed Stochastic Divergence Strategy
Divergence with Smoothing:
Price: Makes new high/low
Stochastic %D: Smoothed momentum fails to confirm
Crossover: %K crosses %D in opposite direction
Volume: Declining participation confirms divergence
Double Stochastic Strategy
Multi-Timeframe Smoothed Analysis
Risk Management Guidelines
Position Sizing
LONG Strategy
Standard
%K crosses above %D in oversold
SHORT Strategy
Standard
%K crosses below %D in overbought
Smoothed Divergence
Increased
Clear %D divergence confirmation
Extreme Levels
Reduced (75%)
%D at very extreme levels (>90/<10)
Stochastic %D Reliability Factors
β Clear %K/%D crossovers at extreme levels β %D momentum acceleration/deceleration β Volume expansion supports crossover β Multi-timeframe %D alignment β Smoothed divergence patterns
Best Practices
For LONG Strategies
Oversold crossovers - Wait for %K to cross above %D below 30
Smoothed confirmation - Ensure %D is turning upward
Volume validation - Confirm crossovers with volume expansion
Trend context - Best results in uptrends or ranging markets
For SHORT Strategies
Overbought crossovers - Wait for %K to cross below %D above 70
Smoothed confirmation - Ensure %D is turning downward
Volume validation - Confirm crossovers with volume expansion
Trend context - Best results in downtrends or ranging markets
Common Mistakes to Avoid
Middle range crossovers - Trading %K/%D crossovers between 30-70
No smoothed confirmation - Ignoring %D momentum direction
Volume ignored - Missing volume validation of crossover signals
Trend fighting - Trading against strong trends without confirmation
Market Conditions Analysis
Uptrend
π’ High (smoothed oversold bounces)
π΄ Low (against trend)
Downtrend
π΄ Low (against trend)
π’ High (smoothed overbought reversals)
Ranging
π’ High (reliable crossovers)
π’ High (reliable crossovers)
High Volatility
π‘ Medium (smoothing helps)
π‘ Medium (smoothing helps)
Low Volume
π΄ Low (wait for confirmation)
π΄ Low (wait for confirmation)
Related Indicators
Conclusion
Key Takeaways
PRIMARY USE: Smoothed momentum confirmation through %K/%D crossovers
SECONDARY USE: Noise reduction and signal reliability enhancement
ALWAYS: Confirm crossovers at extreme levels with volume
NEVER: Trade middle-range crossovers without additional confirmation
Success with Stochastic %D requires understanding its role as a smoothed confirmation tool. The key is waiting for %K/%D crossovers at extreme levels (>70 or <30) and confirming with volume and trend context before entering positions.
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