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Identifying Overbought And Oversold Levels Is A Starting Point In Your Analysis. To Really Understand Those Levels, Though, You Need To Know How They Are Derived. The Stochastic Oscillator Can Do The Job For You.
The Stochastic Oscillator Compares The Price Of A Scrip To Its Price Range Over Any Time Period. The Stochastic Oscillator Is Made Up Of Two Lines: %K (The Primary Line) & %D (The Secondary Line). The %K Is Normally Depicted As A Solid Line; The %D Is Usually Dashed. The %K Line Is The Stochastic Oscillator & The %D Line Smoothes The %K Line, Usually By Three Periods.
The Formula For Calculating The %K Line Is As Follows:
K = [(C - L)/(H - L)] * 100
C = Today's Close
L = Lowest Low Of n Periods
H = Highest High Of n Periods
Between 5 & 21 Periods Is Recommended, Although n Can Be Any Number.
The Formula For The % D Line Is:
%D = 100 * (H3/L3)
INTERPRETING STOCHASTICS According To Steven Achelis, The Following Are The Popular Methods For Interpreting The Oscillator:
1 When Either %K Or %D Falls Below A Specific Level (Usually 20) And Then Rises Above That Level, You Should Buy. Likewise, When The Oscillator Rises Above A Specific Level (Usually 80) And Then Falls Below That Level, You Should Sell.
2 When The %K Line Rises Above %D Line, It Usually Suggests An Entry Point, Whereas When The %K Line Crosses Below The %D Line, It's Considered A Sell Signal.
3 Divergences Can Also Reveal Much About Price Movements. When Prices Continue Moving Up But The Stochastic Oscillator Doesn't, It's A Negative Divergence. When You See This Appear, It Usually Means A Downtrend In Prices Is Likely. Likewise, When Prices Are Moving Down But The Stochastic Oscillator Doesn't Follow The Price Movement, It Usually Means Prices Will Move Up.
Stochastics Are Useful In Identifying Oversold & Overbought Levels And In Determining Turning Points In Prices. Since The Value Of The Oscillator Differs From Day To Day, However, It Can Sometimes display erratic movements, leading to false signals. Because Of That, The Stochastics Oscillator Is Generally Best Used In Conjunction With Other Indicators.......& Those Have Already Been Suggested.... Right Now Go To Sleep
Happy & Safer Trading
SavantGarde
The Stochastic Oscillator Compares The Price Of A Scrip To Its Price Range Over Any Time Period. The Stochastic Oscillator Is Made Up Of Two Lines: %K (The Primary Line) & %D (The Secondary Line). The %K Is Normally Depicted As A Solid Line; The %D Is Usually Dashed. The %K Line Is The Stochastic Oscillator & The %D Line Smoothes The %K Line, Usually By Three Periods.
The Formula For Calculating The %K Line Is As Follows:
K = [(C - L)/(H - L)] * 100
C = Today's Close
L = Lowest Low Of n Periods
H = Highest High Of n Periods
Between 5 & 21 Periods Is Recommended, Although n Can Be Any Number.
The Formula For The % D Line Is:
%D = 100 * (H3/L3)
INTERPRETING STOCHASTICS According To Steven Achelis, The Following Are The Popular Methods For Interpreting The Oscillator:
1 When Either %K Or %D Falls Below A Specific Level (Usually 20) And Then Rises Above That Level, You Should Buy. Likewise, When The Oscillator Rises Above A Specific Level (Usually 80) And Then Falls Below That Level, You Should Sell.
2 When The %K Line Rises Above %D Line, It Usually Suggests An Entry Point, Whereas When The %K Line Crosses Below The %D Line, It's Considered A Sell Signal.
3 Divergences Can Also Reveal Much About Price Movements. When Prices Continue Moving Up But The Stochastic Oscillator Doesn't, It's A Negative Divergence. When You See This Appear, It Usually Means A Downtrend In Prices Is Likely. Likewise, When Prices Are Moving Down But The Stochastic Oscillator Doesn't Follow The Price Movement, It Usually Means Prices Will Move Up.
Stochastics Are Useful In Identifying Oversold & Overbought Levels And In Determining Turning Points In Prices. Since The Value Of The Oscillator Differs From Day To Day, However, It Can Sometimes display erratic movements, leading to false signals. Because Of That, The Stochastics Oscillator Is Generally Best Used In Conjunction With Other Indicators.......& Those Have Already Been Suggested.... Right Now Go To Sleep
Happy & Safer Trading
SavantGarde
Last edited:
I feel so ...
First one is % K. => 5
second one is no. of bars smoothing. => 3 <= Avg Period
third one is %D. => 3 <= %K slow
I think Default settings in Trade Tiger are EXACTLY matching with what you have suggested ... Only there placement/representation on charts is wrong misplaced here and there ... So It feels wrong ...
So what I use 3,5,3 is same as your 5,3,3 ... since representation in my system is different ...
I hope I am correct here ...
Anyway thanks Savant Sir, Prasadam and Dear Rajesh Sir for showing me a lot of torchlight in this darkness of No-Knowledge ...
C u ......
Good Night and have a stone sleep without any dreams!
second one is no. of bars smoothing. => 3 <= Avg Period
third one is %D. => 3 <= %K slow
I think Default settings in Trade Tiger are EXACTLY matching with what you have suggested ... Only there placement/representation on charts is wrong misplaced here and there ... So It feels wrong ...
So what I use 3,5,3 is same as your 5,3,3 ... since representation in my system is different ...
I hope I am correct here ...
Anyway thanks Savant Sir, Prasadam and Dear Rajesh Sir for showing me a lot of torchlight in this darkness of No-Knowledge ...
C u ......
Good Night and have a stone sleep without any dreams!
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