The Stochastic Oscillator
Closed is an oscillator has a range of 0 to 100 and a line indicated by the number 50. The overbought and oversold areas are bounded by the dotted lines the values of 80 and 20.
Formula
It has two lines, the faster the% K and is calculated as follows:
% K = 100 * (CLOSE - Minimum) / (MAXIMUM - MINIMUM)
and the line more smooth and it serves as the Signal is% D through an MA from the% K and is calculated as follows.
% D = SMA (% K, N); SMA = Simple Moving Average
N = periods.
Then there is the slow stochastic (which is recommended), a third value is displayed and a flattening of the entire formula.
Forms of interpretation
In addition to the knowledge used in particular to implement the following to the above courses on:
Sell when the indicator has had a cross over the line and then 80% K line is below the percentage value of the indicator area 75 and the% D line is oriented in the direction of their position, ie turning down in this case.
Buy when the indicator has a junction (on% D% K) below the line of the indicator and 20% K line is on a value greater than 20 and entering the zone 25. The% D line should be aimed at the direction of their operation is that it has turned upward.
As a reference amplitude of the parables of the lines when they observed a bell-shaped route this form indicates that price range and have the paths for the signals that will be better when the lines% K and% D are tangential to one another.
Also note the trend of his time compression (time frame), remember that a trend in moving towards her in proportion of 3 to 1, ie if you will take the triggers of the stochastic goal likely will be his third tour of previously developed the movement in the direction of the trend that dominates. These tours are also normally take twice as long to walk across the direction of the prevailing trend in the chart.
