Previous  Next

Stochastic Oscillator
The Stochastic Oscillator Technical Indicator compares where a security’s price closed relative to its price range over a given time period. The Stochastic Oscillator is displayed as two lines. The main line is called %K. The second line, called %D, is a Moving Average of %K. The %K line is usually displayed as a solid line and the %D line is usually displayed as a dotted line.
There are several ways to interpret a Stochastic Oscillator. Three popular methods include:
CalculationThe Stochastic Oscillator has four variables:
The formula for %K is: %K = (CLOSE-LOW(%K))/(HIGH(%K)-LOW(%K))*100 Where:
CLOSE — is today’s closing price;
LOW(%K) — is the lowest low in %K periods;
HIGH(%K) — is the highest high in %K periods.

The %D moving average is calculated according to the formula: %D = SMA(%K, N)
N — is the smoothing period;
SMA — is the
Simple Moving Average.