Tick-by-tick day trading Simulation Software for currencies, futures and stocks
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Technical Stuies offered in RapidSP

Top Studies

Bollinger Bands

Darvas Boxes

Exponential Moving Average


Fractal Chaos Bands


High/Low Bands


Median Price


Moving Average Envelope


Simple Moving Average


Time Series Moving Average


Triangular Moving Average


Variable Moving Average


VIDYA Moving Average


Weighted Moving Average


Parabolic SAR


Weighted Close


Prime Number Bands


Welles Wilder Smoothing


Bottom Studies


Williams %R

Williams Accumulation Distribution


Vertical Horizontal Filter


Ultimate Oscillator


True Range

TRIX


Rainbow Oscillator


Price Oscillator


Momentum Oscillator


MACD

Directional Movement System


Detrended Price Oscillator


Chande Momentum Oscillator


Chaikin Volatility


Aroon


Aroon Oscillator


Linear Regression R-Squared


Linear Regression Forecast


Linear Regression Slope


Linear Regression Intercept


Performance Index


Commodity Channel Index

Typical Price


Standard Deviation


Price ROC


High Minus Low


Swing Index


Accumulative Swing Index


Comparative RSI


Mass Index


Relative Strength Index


Stochastic Oscillator


Stochastic Momentum Index


Fractal Chaos Oscillator


Prime Number Oscillator


Volume Studies

Volume Oscillator

Ease Of Movement


Price Volume Trend


Chaikin Money Flow


Volume ROC


Money Flow Index


Negative Volume Index


On Balance Volume


Positive Volume Index


Trade Volume Index


Line Studies


Gann Fan

Speed Lines


Fibonacci Arcs


Fibonacci Fans


Fibonacci Retracements


Fibonacci Time Zones


Tirone Levels


Quadrant Lines

Raff Regression


Error Channels


Price Styles


Point And Figure

Renko


Kagi


Three Line Break


Equivolume


Equivolume Shadow


Candle Volume


OHLC Bar


Candle Stick


Stochastic Oscillator 
 



The Stochastic Oscillator is a momentum indicator that shows the location of the current close relative to the high/low range over a set number of periods. Closing levels that are consistently near the top of the range indicate accumulation (buying pressure) and those near the bottom of the range indicate distribution (selling pressure).

The stochastic indicator is:
  • a momentum oscillator that can warn of strength or weakness in the market, often well ahead of the final turning point.
  • based on the assumption that when an instrument is rising it tends to close near the high and when an instrument is falling it tends to close near its lows.


The Stochastic Oscillator was developed by George C. Lane. It is a momentum indicator that shows the location of the current close relative to the high/low range over a set number of periods. Closing levels that are consistently near the top of the range indicate accumulation (buying pressure) and those near the bottom of the range indicate distribution (selling pressure).

%K is fast stochastic oscillator where as %D is slow stochastic oscillator.
%K compares the latest closing price to the recent trading range
%D is a signal line calculated by smoothing %K which is 3-period moving average of %K

In an upward-trending market, prices tend to close near their high, and during a downward-trending market, prices tend to close near their low. Transaction signals occur when the %K crosses through "%D".

The reading below 20 is considered as oversold & above 80 is considered overbought.
According to Lane some of the best signals occurred when the oscillator moved from overbought territory back below 80 and from oversold territory back above 20.

Usage:

It is as a buy/sell signal generator, buying when fast moves above slow and selling when fast moves below slow. Most traders use the Slow Stochastics because of its more reliable signals

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