Stochastic - 21EMA Strategy For ThinkOrSwim

FateOwnzYou

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I get asked for my strategy a TON! so I'm going to just share it here to have a place to direct people.

So when I started trading, I use to always "buy the bottom" and "Sell the top". This was always the rule that I heard. So I figured when I was searching for stocks, I would try to find stocks that have had big fall backs, then I would try to find some type of resistance and buy when it bounces off. But we all know the notorious "bounce then keep falling" routine lol.

So after years and years of trying to accomplish this and master it, I only ended up losing money in the end. Yes I had some really good trades that made me a lot of money, but at the end of the year I could never keep a winning balance. So I decided that I was going to buy into stocks that were already going up, but had a retracement that I could buy off of. Eventually I settled on the 21 length EMA (Exponential Moving Average), I noticed that on almost all timeframes the 21EMA had a huge impact as a support and resistance line on price action. The 21EMA also offered to show when a stock was trending well.

So then I needed a reason to enter, So I mixed in a few stochastics to figure out which one I like the best for this method. I ended up landing on the IFT_StochOsc indicator (Shout out to @Tradervic for showing me this one). So the new plan was when price would fall down to the 21EMA, the price starts to turn around back upwards and the stochastic would jump up. BUY and then hold until the stochastic would fall back down.

lUg6H9a.png


So in this example Above, it shows you that price is staying above the 21EMA and trending well. Price will drop down near EMA and bounce, once you get a confirmed bounce the IFT stochastic will jump to 100. This is where you buy. You want the IFT to be zero'd out before the bounce up and you don't want too much of a gap between the price and the EMA, these like to cause false signals. I have the IFT stochastic indicator set to 3 Length and 1 Slowing Length. You can use whatever you like, but this is what i have fell on liking the most.

So above there are 3 beautiful trades there, of course this is the kind of setups you see on YouTube or google. You always see the perfect charts, of course this doesn't always work.

So here is TSLA:

T0ib4gH.png


  • On the 1st buy signal, the price was already well on its way up before the Stochastic moved up. I try to avoid these. Sometimes they work out, but I see a lot of failed trys when this happens.
  • On the 2nd buy signal, it looks good. I might of preferred the price to be a little closer to the EMA, but this works.
  • On the 3rd buy signal, it is so insanely high above the EMA, stay out of these. These do also have good potential, but I avoid them because Price likes to fall down the the EMA right after a lot.
  • On the 4th signal, 2 bars before the IFTW entry signal the stock closed below the EMA. This is something I also avoid, I want to see the stock bounce off the EMA and not just go back n forth through it no problem.
TSLA is actually one of the stocks I don't like to trade for this reason. If you see a trade setup on a stock, watch how it has reacted to the EMA in the past and how often it influences the price. Some Stocks obey it more than others.

Okay so this Strategy of mine, I have landed on this and have done nothing but trade with this. This is due to the fact that I have realized that no matter what I will get losses. So with this strategy, the stock will either take off and start surging, or its going to start falling slowly. So Since I have started trading with this strategy my average profit on winning trades is around +13.8% and my average loss on losing trades is -2.4% with a total win rate of about 59%. So this is actually huge. Yes you get a lot of losses, but those losses are kept minimal and it lets profits run.

So this next picture is my trades of February and we just finished the 2nd week of the month. It has been a very good month for me. Everyone has their own methods of executing n such. But I prefer stocks that are 5% APTR or higher (Meaning it on average moves 5% on the daily), and I also want the stock to be above the 200SMA (Simple Moving Average) as well.

I also use both Daily and Weekly timeframes with this method. I have also tried this on the 4hr timeframe before, but sometimes price moves so quickly on the open on a trade your suppose to be in, I miss out on them a lot. So I prefer to sit on my trades for days (unless it goes south)

dNNW7X4.png


Every indicator in this Strategy is provided on the TOS application by default.

Using my BTD_Percentile indicator (VIP Indicator) with the strategy above is also very very nice for a confirmation of a bounce. I personally like to use a 5 length on that.

I like to keep my methods simple, no need for always having 21.5 indicators on your screen blocking all the price action. Out of all the fancy indicators out there, and ones that I've made, I still personally only use basic indicators
 
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I would like to confirm and reiterate how useful Fibonacci based EMA are as support and resistance areas. It might seem overkill at times, but I use a ribbon of 8, 13, 21, 34, 55, 89, and 144 ema on all my charts, all time scales, combined with a version of the BTD indicator that I modified to use the exact same number set (I even have a fib ema on the fib based BTD indicators themselves lol.)

The IFT_StochOsc looks interesting, I'll add it and study, thank you for the recommendation.
 
@FateOwnzYou Thanks for sharing if you could share your setup via share link for above strategy would help me. I understand it is all TOS default but I am very new to even make right setups. Thanks in advance
 
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Thank you for sharing this. Do you have a scanner for picking the specific stocks you trade? You mention 5% avg daily more and above 200SMA, I also assume above 21EMA.
 
Fate,.. You put together some interesting strategies,... watching


I urge you to study and write this in a way that will out do the success of this, 60% win rate..... why, because it's there
and instead of looking right, ya all lookin left,... it's right there! I saw a trader say, "24ma was institutional," another used the 17ema, as trend,.... and although I try to stay away from a traditional indicator, I was exploring the use of this on it's strategy with my scans.

"But we all know the notorious "bounce then keep falling" routine lol," smart traders who think they want to play anticipation get stopped out, why not wait for buyers to confirm, it's not late it's smart....

The bounces, the buys, what percentage high are the candles on the buy point?? Check out StockBee for your answer.....

You could have entered earlier if you read price correctly....

7OOHBDb.png


What is the time frame, what "length," is referred to "I also like to use a 5 length,"..... main aggregation of this share of yours....all curious, because this leads a general group down a path of not understanding why things are working, only that the "Indicator," is indicating, maybe it's reading a breakout or the trend for an entry..... details....
 
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"correctly", in this case, is subjective. Fate's method uses the Stoch as his entry, not price action. Sure he could have entered earlier but the oscillator didn't confirm at 100 yet hence his rules would not have been followed.
 
Last edited by a moderator:
I get asked for my strategy a TON! so I'm going to just share it here to have a place to direct people.

So when I started trading, I use to always "buy the bottom" and "Sell the top". This was always the rule that I heard. So I figured when I was searching for stocks, I would try to find stocks that have had big fall backs, then I would try to find some type of resistance and buy when it bounces off. But we all know the notorious "bounce then keep falling" routine lol.

So after years and years of trying to accomplish this and master it, I only ended up losing money in the end. Yes I had some really good trades that made me a lot of money, but at the end of the year I could never keep a winning balance. So I decided that I was going to buy into stocks that were already going up, but had a retracement that I could buy off of. Eventually I settled on the 21 length EMA (Exponential Moving Average), I noticed that on almost all timeframes the 21EMA had a huge impact as a support and resistance line on price action. The 21EMA also offered to show when a stock was trending well.

So then I needed a reason to enter, So I mixed in a few stochastics to figure out which one I like the best for this method. I ended up landing on the IFT_StochOsc indicator (Shout out to @Tradervic for showing me this one). So the new plan was when price would fall down to the 21EMA, the price starts to turn around back upwards and the stochastic would jump up. BUY and then hold until the stochastic would fall back down.

lUg6H9a.png


So in this example Above, it shows you that price is staying above the 21EMA and trending well. Price will drop down near EMA and bounce, once you get a confirmed bounce the IFT stochastic will jump to 100. This is where you buy. You want the IFT to be zero'd out before the bounce up and you don't want too much of a gap between the price and the EMA, these like to cause false signals. I have the IFT stochastic indicator set to 3 Length and 1 Slowing Length. You can use whatever you like, but this is what i have fell on liking the most.

So above there are 3 beautiful trades there, of course this is the kind of setups you see on YouTube or google. You always see the perfect charts, of course this doesn't always work.

So here is TSLA:

T0ib4gH.png


  • On the 1st buy signal, the price was already well on its way up before the Stochastic moved up. I try to avoid these. Sometimes they work out, but I see a lot of failed trys when this happens.
  • On the 2nd buy signal, it looks good. I might of preferred the price to be a little closer to the EMA, but this works.
  • On the 3rd buy signal, it is so insanely high above the EMA, stay out of these. These do also have good potential, but I avoid them because Price likes to fall down the the EMA right after a lot.
  • On the 4th signal, 2 bars before the IFTW entry signal the stock closed below the EMA. This is something I also avoid, I want to see the stock bounce off the EMA and not just go back n forth through it no problem.
TSLA is actually one of the stocks I don't like to trade for this reason. If you see a trade setup on a stock, watch how it has reacted to the EMA in the past and how often it influences the price. Some Stocks obey it more than others.

Okay so this Strategy of mine, I have landed on this and have done nothing but trade with this. This is due to the fact that I have realized that no matter what I will get losses. So with this strategy, the stock will either take off and start surging, or its going to start falling slowly. So Since I have started trading with this strategy my average profit on winning trades is around +13.8% and my average loss on losing trades is -2.4% with a total win rate of about 59%. So this is actually huge. Yes you get a lot of losses, but those losses are kept minimal and it lets profits run.

So this next picture is my trades of February and we just finished the 2nd week of the month. It has been a very good month for me. Everyone has their own methods of executing n such. But I prefer stocks that are 5% APTR or higher (Meaning it on average moves 5% on the daily), and I also want the stock to be above the 200SMA (Simple Moving Average) as well.

I also use both Daily and Weekly timeframes with this method. I have also tried this on the 4hr timeframe before, but sometimes price moves so quickly on the open on a trade your suppose to be in, I miss out on them a lot. So I prefer to sit on my trades for days (unless it goes south)

dNNW7X4.png


Every indicator in this Strategy is provided on the TOS application by default.

Using my BTD_Percentile indicator (VIP Indicator) with the strategy above is also very very nice for a confirmation of a bounce. I personally like to use a 5 length on that.

I like to keep my methods simple, no need for always having 21.5 indicators on your screen blocking all the price action. Out of all the fancy indicators out there, and ones that I've made, I still personally only use basic indicators
Hi
How do you do a scan then @FateOwnzYou ? Do we scan for stocks above 21 EMA and IFT Stoch above 80?
Yes how could we possible scan using this method? Thanks
 
@Gellidus @Joseph Patrick 18 It seems fairly simple to scan for @FateOwnzYou's criteria. I received 231 results without any other filters. The additional filters of "...stocks that are 5% APTR or higher (Meaning it on average moves 5% on the daily) . . . and . . . above the 200SMA (Simple Moving Average) as well" should be simple to add. @FateOwnzYou described his strategy quite clearly in his post.

ift.png

ema.png
 
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@Gellidus @Joseph Patrick 18 It seems fairly simple to scan for @FateOwnzYou's criteria. I received 231 results without any other filters. The additional filters of "...stocks that are 5% APTR or higher (Meaning it on average moves 5% on the daily) . . . and . . . above the 200SMA (Simple Moving Average) as well" should be simple to add. @FateOwnzYou described his strategy quite clearly in his post.

ift.png

ema.png
Thanks Pensar, I read the post I just sometimes have problems with application even tho it seems simple enough. Thanks
 
I thought I would look at the historical trades posted to see the entry points. I must be missing something. I don't see how the entry points worked in daily charts. Are the entries at lower timeframes? If so, what do you look for? I fail to see how the first CRM entry worked from daily chart.

th5BHVA.png
 
I thought I would look at the historical trades posted to see the entry points. I must be missing something. I don't see how the entry points worked in daily charts. Are the entries at lower timeframes? If so, what do you look for? I fail to see how the first CRM entry worked from daily chart.

th5BHVA.png
If you entered at the question mark how would the trade not workout? IFT jumped to 100 and green candle above 21EMA....get out at first IFT drop or stay in cuz price is way above 21EMA...thats a $20-$25 dollar move from 2/1 - 2/22...if im reading the chart correctly and have the strat right that is
 
If you entered at the question mark how would the trade not workout? IFT jumped to 100 and green candle above 21EMA....get out at first IFT drop or stay in cuz price is way above 21EMA...thats a $20-$25 dollar move from 2/1 - 2/22...if im reading the chart correctly and have the strat right that is
I’m comparing the entry and exit prices in the backtest table. It’s the open price vs close price on 2/1. Why wait for 2/1?
 
Watching SPY closely now for an entry. Finally got a nice pullback to the 21ema on the daily and IFT is flatlining at 0. Now it will take some patience to wait for the entry, for IFT to move back up to 100.
 
I would like to confirm and reiterate how useful Fibonacci based EMA are as support and resistance areas. It might seem overkill at times, but I use a ribbon of 8, 13, 21, 34, 55, 89, and 144 ema on all my charts, all time scales, combined with a version of the BTD indicator that I modified to use the exact same number set (I even have a fib ema on the fib based BTD indicators themselves lol.)

The IFT_StochOsc looks interesting, I'll add it and study, thank you for the recommendation.
Can you share this chart with me? What indicator are you using for this and how are you using it?
 
I get asked for my strategy a TON! so I'm going to just share it here to have a place to direct people.

So when I started trading, I use to always "buy the bottom" and "Sell the top". This was always the rule that I heard. So I figured when I was searching for stocks, I would try to find stocks that have had big fall backs, then I would try to find some type of resistance and buy when it bounces off. But we all know the notorious "bounce then keep falling" routine lol.

So after years and years of trying to accomplish this and master it, I only ended up losing money in the end. Yes I had some really good trades that made me a lot of money, but at the end of the year I could never keep a winning balance. So I decided that I was going to buy into stocks that were already going up, but had a retracement that I could buy off of. Eventually I settled on the 21 length EMA (Exponential Moving Average), I noticed that on almost all timeframes the 21EMA had a huge impact as a support and resistance line on price action. The 21EMA also offered to show when a stock was trending well.

So then I needed a reason to enter, So I mixed in a few stochastics to figure out which one I like the best for this method. I ended up landing on the IFT_StochOsc indicator (Shout out to @Tradervic for showing me this one). So the new plan was when price would fall down to the 21EMA, the price starts to turn around back upwards and the stochastic would jump up. BUY and then hold until the stochastic would fall back down.

lUg6H9a.png


So in this example Above, it shows you that price is staying above the 21EMA and trending well. Price will drop down near EMA and bounce, once you get a confirmed bounce the IFT stochastic will jump to 100. This is where you buy. You want the IFT to be zero'd out before the bounce up and you don't want too much of a gap between the price and the EMA, these like to cause false signals. I have the IFT stochastic indicator set to 3 Length and 1 Slowing Length. You can use whatever you like, but this is what i have fell on liking the most.

So above there are 3 beautiful trades there, of course this is the kind of setups you see on YouTube or google. You always see the perfect charts, of course this doesn't always work.

So here is TSLA:

T0ib4gH.png


  • On the 1st buy signal, the price was already well on its way up before the Stochastic moved up. I try to avoid these. Sometimes they work out, but I see a lot of failed trys when this happens.
  • On the 2nd buy signal, it looks good. I might of preferred the price to be a little closer to the EMA, but this works.
  • On the 3rd buy signal, it is so insanely high above the EMA, stay out of these. These do also have good potential, but I avoid them because Price likes to fall down the the EMA right after a lot.
  • On the 4th signal, 2 bars before the IFTW entry signal the stock closed below the EMA. This is something I also avoid, I want to see the stock bounce off the EMA and not just go back n forth through it no problem.
TSLA is actually one of the stocks I don't like to trade for this reason. If you see a trade setup on a stock, watch how it has reacted to the EMA in the past and how often it influences the price. Some Stocks obey it more than others.

Okay so this Strategy of mine, I have landed on this and have done nothing but trade with this. This is due to the fact that I have realized that no matter what I will get losses. So with this strategy, the stock will either take off and start surging, or its going to start falling slowly. So Since I have started trading with this strategy my average profit on winning trades is around +13.8% and my average loss on losing trades is -2.4% with a total win rate of about 59%. So this is actually huge. Yes you get a lot of losses, but those losses are kept minimal and it lets profits run.

So this next picture is my trades of February and we just finished the 2nd week of the month. It has been a very good month for me. Everyone has their own methods of executing n such. But I prefer stocks that are 5% APTR or higher (Meaning it on average moves 5% on the daily), and I also want the stock to be above the 200SMA (Simple Moving Average) as well.

I also use both Daily and Weekly timeframes with this method. I have also tried this on the 4hr timeframe before, but sometimes price moves so quickly on the open on a trade your suppose to be in, I miss out on them a lot. So I prefer to sit on my trades for days (unless it goes south)

dNNW7X4.png


Every indicator in this Strategy is provided on the TOS application by default.

Using my BTD_Percentile indicator (VIP Indicator) with the strategy above is also very very nice for a confirmation of a bounce. I personally like to use a 5 length on that.

I like to keep my methods simple, no need for always having 21.5 indicators on your screen blocking all the price action. Out of all the fancy indicators out there, and ones that I've made, I still personally only use basic indicators

@FateOwnzYou - really interesting strategy. I notice your setting for the Stochastic set at 3,1,80,20....i trade on intraday charts, would this still be relevant? Do the settings for the indicator need to change?

Is anyone using this strategy intraday?
 

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