Overview
The KST Strategy integrates the Know Sure Thing (KST) momentum oscillator, Williams Alligator trend filter, and Moving Average confirmation to identify high-probability trading setups. Designed for trending markets, this strategy emphasizes long-only positions with dynamic ATR-based stop-loss and take-profit levels, reducing reliance on fixed price thresholds. Optional Choppiness Index filtering further refines entries by avoiding sideways markets.
Core Components
1. Know Sure Thing (KST) Indicator
Developed by Martin Pring, KST measures momentum by combining four smoothed Rate of Change (ROC) values:
Formula:
KST = (ROC1 × 1) + (ROC2 × 2) + (ROC3 × 3) + (ROC4 × 4)- Signal Line: Smoothed moving average (SMA) of KST values.
- Buy Signal: KST line crosses above the signal line.
2. Williams Alligator (Trend Filter)
- Jaw (Blue Line): 13-period smoothed MA, 8-bar shift.
- Teeth (Red Line): 8-period smoothed MA, 5-bar shift.
- Condition: Price must be above the Jaw line.
3. Moving Average (Trend Confirmation)
- Default: Least Squares MA (200-period).
- Purpose: Ensures trades align with the long-term trend.
4. Choppiness Index (Optional Filter)
- Threshold: Default ≤50 (avoids choppy markets).
Calculation:
Choppiness Index = 100 × log10(ΣATR(n) / (MaxHigh(n) - MinLow(n))) / log10(n)
Trade Execution Logic
Entry Conditions
- Price > Alligator’s Jaw line.
- Price > Filter MA (200-period).
- KST line crosses above its signal line.
- Choppiness Index < threshold (if enabled).
Exit Conditions
- Stop-Loss: Low of entry candle − (1.5 × ATR).
- Take Profit: Close of entry candle + (3.5 × ATR).
- Trailing: Exit if price breaches either level.
Backtest Performance (2023–2025)
| Metric | Value |
|---|---|
| Net Profit | +51.75% |
| Win Rate | 56.67% |
| Avg Trade Duration | 27 hours |
| Max Drawdown | -9.1% |
Settings: 60% capital per trade, Binance commission (0.1%).
How to Use
- Apply to 1H charts (optimal for BTC/USDT).
- Configure ATR multipliers and Choppiness Index threshold via inputs.
- Set Alerts: Use
{{strategy.order.alert_message}}for automation.
FAQs
Q: Why use ATR for stop-loss?
A: ATR adapts to volatility, preventing premature exits during high volatility and tightening stops in calm markets.
Q: Can this strategy be used for short trades?
A: No—this version is long-only. Modify the script for short signals by inverting conditions.
Q: How does the Choppiness Index improve results?
A: It filters out low-momentum phases, reducing false entries in ranging markets.
Keywords
- KST indicator
- ATR stop-loss
- Trend following strategy
- Choppiness Index filter
- Williams Alligator
👉 Explore advanced trading strategies for more tools like the KST system.
Disclaimer: Past performance ≠ future results. Test in a simulated environment before live trading.
### Key Features:
- **SEO Optimization**: Natural keyword integration (e.g., "ATR stop-loss," "trend following strategy").