SuperTrade's Stoch RSI Reversal Strategy with SL/TP

This strategy uses a combination of two tools, the Stochastic RSI (Relative Strength Index) and a simple risk management system, to help traders make better decisions on when to enter or exit a trade. Let's break it down step by step so it's easy to understand.

Check out my other strategies:

SuperTrade Ichimoku Cloud Strategy

SuperTrade ST1 Strategy

Stochastic RSI
The Stochastic RSI is an indicator that combines two popular indicators: the RSI and the Stochastic Oscillator. It measures whether an asset is overbought or oversold. The value of the Stochastic RSI oscillates between 0 and 1. When it's below 0.2, the asset is considered oversold (a potential buying signal), and when it's above 0.8, the asset is overbought (a potential selling signal).

SmoothK and SmoothD
These are two smoothed moving averages of the Stochastic RSI values. "K" and "D" help to smooth out the Stochastic RSI so that signals become clearer and less noisy. The strategy uses these smoothed values to identify when to enter or exit a trade.

Risk Management (Stop Loss and Take Profit)
The strategy includes stop loss and take profit settings, which are used to control the amount of loss or profit you’re willing to accept on each trade. For example, if a trade moves against you by a certain percentage (like 1%), the stop loss will automatically close the trade to prevent further loss. Similarly, when your trade gains a certain percentage (like 2%), the take profit will close the trade to lock in profits.

Long and Short Conditions

Long Condition: A "long" trade is a buy order. The strategy will consider entering a long position when the "K" line crosses above the "D" line, and the "K" line is below 20 (indicating that the asset is oversold, so a buying opportunity may arise).

Short Condition: A "short" trade is a sell order. The strategy will enter a short position when the "K" line crosses below the "D" line, and the "K" line is above 80 (indicating that the asset is overbought, so a selling opportunity may arise).

Entry and Exit
When the conditions for a long or short trade are met, the strategy enters a position.
It also automatically sets stop loss and take profit levels based on the defined percentages to protect against large losses or secure profits.

Plotting

The lines for "K" and "D" are plotted on the chart so you can visually track when the strategy is triggering buy or sell signals. The 80 and 20 lines are also shown to indicate the overbought and oversold levels.

This strategy is designed to help traders make smart decisions based on market conditions and to protect their investments by automatically setting stop loss and take profit levels.