OPEN-SOURCE SCRIPT
Updated Stochastic with Z-Score
📊 Stochastic with Z-Score
This custom indicator enhances the classic Stochastic Oscillator by applying Z-Score normalization to both %K and %D lines, helping traders identify statistically significant overbought and oversold conditions based on historical behavior.
🔍 Key Features:
Z-Score Normalization of %K and %D:
Detects deviations from the mean using standard deviation, offering a more dynamic and statistically grounded way to interpret momentum.
Signal Confirmation Filters:
✅ Trend Filter using 200 EMA: Only trade in the direction of the prevailing trend.
✅ Volume Filter: Confirms signals only when volume exceeds the moving average, reducing noise.
Buy & Sell Signals:
📈 Buy: Triggered when the Z-score of %K crosses above a negative threshold, %D is still below that threshold, and the candle is bullish.
📉 Sell: Triggered when the Z-score of %K crosses below a positive threshold, %D is still above that threshold, and the candle is bearish.
Signals are further filtered by trend and volume if enabled.
Customizable Thresholds & Settings:
Control Z-score length, thresholds, Stochastic lengths, and filter settings.
Visual Enhancements:
Colored histogram based on Z-score levels.
Shaded background in overbought/oversold zones.
Clear “Buy” and “Sell” labels plotted directly on the chart.
Alerts Included:
Set alerts on confirmed buy and sell signals for real-time notifications.
📘 How to Use:
Use this indicator on any timeframe or asset.
Enable or disable trend and volume filters depending on your strategy.
Use signals in confluence with price action or other indicators.
Adjust Z-score thresholds for more or fewer signals based on your risk profile.
⚠️ Note: This is an indicator, not a strategy. Always test signals on historical data and in simulation before live trading.
This custom indicator enhances the classic Stochastic Oscillator by applying Z-Score normalization to both %K and %D lines, helping traders identify statistically significant overbought and oversold conditions based on historical behavior.
🔍 Key Features:
Z-Score Normalization of %K and %D:
Detects deviations from the mean using standard deviation, offering a more dynamic and statistically grounded way to interpret momentum.
Signal Confirmation Filters:
✅ Trend Filter using 200 EMA: Only trade in the direction of the prevailing trend.
✅ Volume Filter: Confirms signals only when volume exceeds the moving average, reducing noise.
Buy & Sell Signals:
📈 Buy: Triggered when the Z-score of %K crosses above a negative threshold, %D is still below that threshold, and the candle is bullish.
📉 Sell: Triggered when the Z-score of %K crosses below a positive threshold, %D is still above that threshold, and the candle is bearish.
Signals are further filtered by trend and volume if enabled.
Customizable Thresholds & Settings:
Control Z-score length, thresholds, Stochastic lengths, and filter settings.
Visual Enhancements:
Colored histogram based on Z-score levels.
Shaded background in overbought/oversold zones.
Clear “Buy” and “Sell” labels plotted directly on the chart.
Alerts Included:
Set alerts on confirmed buy and sell signals for real-time notifications.
📘 How to Use:
Use this indicator on any timeframe or asset.
Enable or disable trend and volume filters depending on your strategy.
Use signals in confluence with price action or other indicators.
Adjust Z-score thresholds for more or fewer signals based on your risk profile.
⚠️ Note: This is an indicator, not a strategy. Always test signals on historical data and in simulation before live trading.
Release Notes
v1.0 -26/07/26 : Updated histogram color and buy sell logic correction.Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.