---
title: "Bitcoin Stochastic RSI Strategy Backtest: Combining Two Indicators into One"
date: "2026-03-23 14:07:06"
author: ""
permalink: "https://boringedge.com/bitcoin-stochastic-rsi-strategy-backtest/"
categories: ["Uncategorized"]
tags: []
description: "Stochastic RSI applies the Stochastic oscillator formula to RSI values instead of price — essentially creating a momentum-of-momentum indicator. It’s..."
---

Stochastic RSI applies the Stochastic oscillator formula to RSI values instead of price — essentially creating a momentum-of-momentum indicator. It's more sensitive than plain RSI and generates signals faster. Buy when %K crosses above 20 (leaving oversold), sell when it drops below 80 (leaving overbought).

## Strategy Rules

- **Buy** when Stochastic RSI %K crosses above 20
- **Sell** when Stochastic RSI %K crosses below 80
- Settings: RSI(14), Stochastic(14), %K smoothing(3), %D smoothing(3)

- 100% position size — fully in or fully out
- 0.1% transaction fee per trade
- No leverage, no short selling
## Backtest Results

Period: 2017-09-16 to 2026-03-23 (8.5 years)

Strategy CAGR37.3%
Buy & Hold CAGR41.5%
Strategy Max Drawdown-47.4%
B&H Max Drawdown-83.2%
Total Trades98
Win Rate54.1%
Win/Loss Ratio1.8x
Time in Market50.5%

## Key Findings

Stochastic RSI achieves a 37.3% CAGR vs 41.5% Buy & Hold — close but slightly below. It doesn't quite beat the benchmark.

The risk management is excellent. Max drawdown of -47.4% is among the best we've tested, much better than Buy & Hold's -83.2%.

With 98 trades and 54.1% win rate, Stochastic RSI generates good quality signals. The win rate above 50% is notable — most trend-following strategies have lower win rates.

The risk-reward profile sits between ADX (better returns) and CCI (worse returns). A solid defensive choice.

## Complete Trade Log

#EntryExitReturnDays
12017-09-172017-10-04+13.5%17
22017-10-302017-11-10+6.1%11
32017-11-152017-12-09+102.2%24
42017-12-282018-01-09+1.3%12
52018-01-222018-02-02-17.7%11
62018-02-092018-02-23+16.5%14
72018-03-202018-03-26-8.9%6
82018-04-082018-04-26+31.8%18
92018-05-102018-06-03-14.5%24
102018-06-202018-06-28-13.6%8
...(78 more trades)
882025-05-272025-06-20-5.4%24
892025-06-262025-07-08+1.6%12
902025-08-072025-08-19-4.1%12
912025-08-222025-09-05-5.6%14
922025-09-292025-10-10-1.5%11
932025-10-242025-11-03-4.2%10
942025-11-192025-12-11+0.8%22
952025-12-202026-01-08+2.9%19
962026-01-232026-02-21-24.3%29
972026-03-212026-03-23 (open)+3.6%2

## Should You Use Stochastic RSI?

Stochastic RSI is a respectable strategy — not the highest returns, but excellent risk management. It's best suited for traders who prioritize capital preservation over maximum gains. The 54% win rate and manageable drawdowns make it psychologically easier to follow than more aggressive strategies.

Data source: Binance BTC/USDT daily candles. Backtest includes 0.1% transaction fees. Past performance does not guarantee future results.