Stochastics...

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peace69
270
peace69  

Hi all,

Is there a way to plot the Stochastic indicator on the Price graph? If so How is it done?

Thanks in advance

Peace..

Eaglehawk
218
Eaglehawk  

PeaceLover, (nice name), stolcastics are nothing but two moving averages on a percentage graph rather than a price graph. if you have to moving averages on your graph, it'll show the same results as a stolcastics.

the same is true for several indicators. cci is used from the same equation as bollinger bands, when bollinger bands close together, a cci shows a price divergance. macd is just two moving averages on a histogram, and so forth.

peace69
270
peace69  
Eaglehawk:
PeaceLover, (nice name), stolcastics are nothing but two moving averages on a percentage graph rather than a price graph. if you have to moving averages on your graph, it'll show the same results as a stolcastics. the same is true for several indicators. cci is used from the same equation as bollinger bands, when bollinger bands close together, a cci shows a price divergance. macd is just two moving averages on a histogram, and so forth.

Thanks for the explaintion, but that still leaves my guestion unanswered. How to i plot, MACD, Stoch, CCi on the price graph in MT4.

Eaglehawk
218
Eaglehawk  
PeaceLover:
Thanks for the explaintion, but that still leaves my guestion unanswered. How to i plot, MACD, Stoch, CCi on the price graph in MT4.

first of all, you mentioned stolchastics, let me clarify what i meant. since i said a stolcastics is just two moving avereages, and when i say it essentially is, I MEAN ALL A STOLCASTICS IS, is two moving averages, there is no additional configuration, it is simple, moving averages seperated from the price chart. to plot a stolcastics on the price chart, plot two moving averages on your chart and there's your stolcastics.

next you mentioned the macd, to plot a macd, you take two moving averages, and you've also got a macd. the histogram of a macd is determined by the distance between two moving averages.

to give a broader version of the picture, a moving average has three stages, first you have the standard moving average or exponential moving average, thoose are the basics, just and average of the close of the last few bars. then you take it a step further and take it off the price chart, this was usefull for many firstly, because it was easier to see, being out of the bars, and secondly, crosses were easier to see. then you take it a step further and add a histogram of the difference between the two moving averages, and you get a macd. if you want the actuall histogram visible on the price chart, i don't know how to help you there.

if you're making an ea with theese symbols, the coding is farly simple when you get down to the simple concept of moving averages. if you want me to show you an example, just be sure to let me know.

Thruline
196
Thruline  

I haven't been able to paste one over price either... the attached indicator kind of works. I guess the problem is they're on different scales.

peace69
270
peace69  
Thruline:
I haven't been able to paste one over price either... the attached indicator kind of works. I guess the problem is they're on different scales.

THANK YOU, That does the trick for Stockastics. I will play around with it and see. Their must be someone that has made one for MACD and other indicators.

Once angain, Thank you

Peace out

peace69
270
peace69  
Eaglehawk:
first of all, you mentioned stolchastics, let me clarify what i meant. since i said a stolcastics is just two moving avereages, and when i say it essentially is, I MEAN ALL A STOLCASTICS IS, is two moving averages, there is no additional configuration, it is simple, moving averages seperated from the price chart. to plot a stolcastics on the price chart, plot two moving averages on your chart and there's your stolcastics.

next you mentioned the macd, to plot a macd, you take two moving averages, and you've also got a macd. the histogram of a macd is determined by the distance between two moving averages.

to give a broader version of the picture, a moving average has three stages, first you have the standard moving average or exponential moving average, thoose are the basics, just and average of the close of the last few bars. then you take it a step further and take it off the price chart, this was usefull for many firstly, because it was easier to see, being out of the bars, and secondly, crosses were easier to see. then you take it a step further and add a histogram of the difference between the two moving averages, and you get a macd. if you want the actuall histogram visible on the price chart, i don't know how to help you there.

if you're making an ea with theese symbols, the coding is farly simple when you get down to the simple concept of moving averages. if you want me to show you an example, just be sure to let me know.

Thank you for the info. I understand what you mean, that they are just moving averages. I have used different charting software and they all let you plot then in the price chart, just want to understand why is it so difficuilt to do so in MT4.

thruline, has attached an stockastic indicator that can do so, try it.

Thanks for you help.

Peace Out

PipTrip
192
PipTrip  

[QUOTE=Eaglehawk]first of all, you mentioned stolchastics, let me clarify what i meant. since i said a stolcastics is just two moving avereages, and when i say it essentially is, I MEAN ALL A STOLCASTICS IS, is two moving averages, there is no additional configuration, it is simple, moving averages seperated from the price chart. to plot a stolcastics on the price chart, plot two moving averages on your chart and there's your stolcastics.next you mentionedthe macd, to plot a macd, you take two moving averages, and you've also got a macd. the histogram of a macd is determined by the distance between two moving averages.

Eaglehawk, this is not true or really not even close due to the % factor.

Developed by George C. Lane in the late 1950s, 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).

Calculation

A 14-day %K (14-period Stochastic Oscillator) would use the most recent close, the highest high over the last 14 days and the lowest low over the last 14 days. The number of periods will vary according to the sensitivity and the type of signals desired. As with RSI, 14 is a popular number of periods for calculation.

%K tells us that the close (115.38) was in the 57th percentile of the high/low range, or just above the mid-point. Because %K is a percentage or ratio, it will fluctuate between 0 and 100. A 3-day simple moving average of %K is usually plotted alongside to act as a signal or trigger line, called %D.

Slow versus Fast versus Full

There are three types of Stochastic Oscillators: Fast, Slow, and Full. The Full Stochastic is discussed later. For now, let's look at Fast versus Slow. As shown above, the Fast Stochastic Oscillator is made up of %K and %D. In order to avoid confusion between the two, I'll use %K (fast) and %D (fast) to refer to those used in the Fast Stochastic Oscillator, and %K (slow) and %D (slow) to refer to those used in the Slow Stochastic Oscillator. The driving force behind both Stochastic Oscillators is %K (fast), which is found using the formula provided above.

In the CSCO example, the Fast Stochastic Oscillator is plotted in the box just below the price plot. The thick black line represents %K (fast) and the thin red line represents %D (fast). Also called the trigger line, %D (fast) is a smoothed version of %K (fast). One method of smoothing data is to apply a moving average. To smooth %K (fast) and create %D (fast), a 3-period simple moving average was applied to %K (fast). Notice how the %K (fast) line pierces the %D (fast) line a number of times during May, June and July. To alleviate some of these false breaks and smooth %K (fast), the Slow Stochastic Oscillator was developed.

The Slow Stochastic Oscillator is plotted in the lower box: the thick black line represents %K (slow) and the thin red line represents %D (slow). To find %K (slow) in the Slow Stochastic Oscillator, a 3-day SMA was applied to %K (fast). This 3-day SMA slowed (or smoothed) the data to form a slower version of %K (fast). A close examination would reveal that %D (Fast), the thin red line in the Fast Stochastic Oscillator, is identical to %K (Slow), the thick black line in the Slow Stochastic Oscillator. To form the trigger line, or %D (slow) in the Slow Stochastic Oscillator, a 3-day SMA was applied to %K (Slow).

The Full Stochastic Oscillator takes three parameters. Just as in the Fast and Slow versions, the first parameter is the number of periods used to create the initial %K line and the last parameter is the number of periods used to create the %D (full) signal line. What's new is the additional parameter, the one in the middle. It is a "smoothing factor" for the initial %K line. The %K (full) line that gets plotted is a n-period SMA of the initial %K line (where n is equal to the middle parameter).

The Full Stochastic Oscillator is more advanced and more flexible than it's Fast and Slow cousins. You can even use it to duplicate the other versions. For example, a (14, 3) Fast Stochastic is equivalent to a (14, 1, 3) Full Stochastic and a (12, 2) Slow Stochastic is equal to a (12, 3, 2) Full Stochastic.

%K and %D Recap

%K (fast) = %K formula presented above using x periods

%D (fast) = y-day SMA of %K (fast)

%K (slow) = 3-day SMA of %K (fast)

%D (slow) = y-day SMA of %K (slow)

%K (full) = y-day SMA of %K (fast)

%D (full) = z-day SMA of %K (full)

where x is the first parameter, y is the second parameter and (in the case of Full stochastics), z is the third parameter. In the case of Fast and Slow Stochastics, x is typically 14 and y is usually set to 3.

Use

Readings below 20 are considered oversold and readings above 80 are considered overbought. However, Lane did not believe that a reading above 80 was necessarily bearish or a reading below 20 bullish. A security can continue to rise after the Stochastic Oscillator has reached 80 and continue to fall after the Stochastic Oscillator has reached 20. Lane believed that some of the best signals occurred when the oscillator moved from overbought territory back below 80 and from oversold territory back above 20.

Buy and sell signals can also be given when %K crosses above or below %D. However, crossover signals are quite frequent and can result in a lot of whipsaws.

One of the most reliable signals is to wait for a divergence to develop from overbought or oversold levels. Once the oscillator reaches overbought levels, wait for a negative divergence to develop and then a cross below 80. This usually requires a double dip below 80 and the second dip results in the sell signal. For a buy signal, wait for a positive divergence to develop after the indicator moves below 20. This will usually require a trader to disregard the first break above 20. After the positive divergence forms, the second break above 20 confirms the divergence and a buy signal is given.

Example

In the IBM example above, it is clear that acting solely on overbought and oversold crossovers can generate false signals. Using crossovers of %D (slow) by %K (slow) can result in some good signals, but there are still whipsaws. By looking for divergences and overbought/oversold crossovers together, the 14-day Slow Stochastic Oscillator can produce fewer yet more reliable signals. The Slow Stochastic Oscillator produced 2 solid signals in IBM between Aug-99 and Mar-99. In Nov-99, a buy signal was given when the indicator formed a positive divergence and moved above 20 for the second time. Note that the double top in Nov-Dec (gray circle) was not a negative divergence -- the stock continued higher after this formed. In Jan-00, a sell signal was given when a negative divergence formed and the indicator dipped below 80 for the second time.

Eaglehawk
218
Eaglehawk  
Pip Trip:
[QUOTE=Eaglehawk]first of all, you mentioned stolchastics, let me clarify what i meant. since i said a stolcastics is just two moving avereages, and when i say it essentially is, I MEAN ALL A STOLCASTICS IS, is two moving averages, there is no additional configuration, it is simple, moving averages seperated from the price chart. to plot a stolcastics on the price chart, plot two moving averages on your chart and there's your stolcastics.next you mentionedthe macd, to plot a macd, you take two moving averages, and you've also got a macd. the histogram of a macd is determined by the distance between two moving averages.

Eaglehawk, this is not true or really not even close due to the % factor.

Developed by George C. Lane in the late 1950s, 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).

Calculation

A 14-day %K (14-period Stochastic Oscillator) would use the most recent close, the highest high over the last 14 days and the lowest low over the last 14 days. The number of periods will vary according to the sensitivity and the type of signals desired. As with RSI, 14 is a popular number of periods for calculation.

%K tells us that the close (115.38) was in the 57th percentile of the high/low range, or just above the mid-point. Because %K is a percentage or ratio, it will fluctuate between 0 and 100. A 3-day simple moving average of %K is usually plotted alongside to act as a signal or trigger line, called %D.

Slow versus Fast versus Full

There are three types of Stochastic Oscillators: Fast, Slow, and Full. The Full Stochastic is discussed later. For now, let's look at Fast versus Slow. As shown above, the Fast Stochastic Oscillator is made up of %K and %D. In order to avoid confusion between the two, I'll use %K (fast) and %D (fast) to refer to those used in the Fast Stochastic Oscillator, and %K (slow) and %D (slow) to refer to those used in the Slow Stochastic Oscillator. The driving force behind both Stochastic Oscillators is %K (fast), which is found using the formula provided above.

In the CSCO example, the Fast Stochastic Oscillator is plotted in the box just below the price plot. The thick black line represents %K (fast) and the thin red line represents %D (fast). Also called the trigger line, %D (fast) is a smoothed version of %K (fast). One method of smoothing data is to apply a moving average. To smooth %K (fast) and create %D (fast), a 3-period simple moving average was applied to %K (fast). Notice how the %K (fast) line pierces the %D (fast) line a number of times during May, June and July. To alleviate some of these false breaks and smooth %K (fast), the Slow Stochastic Oscillator was developed.

The Slow Stochastic Oscillator is plotted in the lower box: the thick black line represents %K (slow) and the thin red line represents %D (slow). To find %K (slow) in the Slow Stochastic Oscillator, a 3-day SMA was applied to %K (fast). This 3-day SMA slowed (or smoothed) the data to form a slower version of %K (fast). A close examination would reveal that %D (Fast), the thin red line in the Fast Stochastic Oscillator, is identical to %K (Slow), the thick black line in the Slow Stochastic Oscillator. To form the trigger line, or %D (slow) in the Slow Stochastic Oscillator, a 3-day SMA was applied to %K (Slow).

The Full Stochastic Oscillator takes three parameters. Just as in the Fast and Slow versions, the first parameter is the number of periods used to create the initial %K line and the last parameter is the number of periods used to create the %D (full) signal line. What's new is the additional parameter, the one in the middle. It is a "smoothing factor" for the initial %K line. The %K (full) line that gets plotted is a n-period SMA of the initial %K line (where n is equal to the middle parameter).

The Full Stochastic Oscillator is more advanced and more flexible than it's Fast and Slow cousins. You can even use it to duplicate the other versions. For example, a (14, 3) Fast Stochastic is equivalent to a (14, 1, 3) Full Stochastic and a (12, 2) Slow Stochastic is equal to a (12, 3, 2) Full Stochastic.

%K and %D Recap

%K (fast) = %K formula presented above using x periods

%D (fast) = y-day SMA of %K (fast)

%K (slow) = 3-day SMA of %K (fast)

%D (slow) = y-day SMA of %K (slow)

%K (full) = y-day SMA of %K (fast)

%D (full) = z-day SMA of %K (full)

where x is the first parameter, y is the second parameter and (in the case of Full stochastics), z is the third parameter. In the case of Fast and Slow Stochastics, x is typically 14 and y is usually set to 3.

Use

Readings below 20 are considered oversold and readings above 80 are considered overbought. However, Lane did not believe that a reading above 80 was necessarily bearish or a reading below 20 bullish. A security can continue to rise after the Stochastic Oscillator has reached 80 and continue to fall after the Stochastic Oscillator has reached 20. Lane believed that some of the best signals occurred when the oscillator moved from overbought territory back below 80 and from oversold territory back above 20.

Buy and sell signals can also be given when %K crosses above or below %D. However, crossover signals are quite frequent and can result in a lot of whipsaws.

One of the most reliable signals is to wait for a divergence to develop from overbought or oversold levels. Once the oscillator reaches overbought levels, wait for a negative divergence to develop and then a cross below 80. This usually requires a double dip below 80 and the second dip results in the sell signal. For a buy signal, wait for a positive divergence to develop after the indicator moves below 20. This will usually require a trader to disregard the first break above 20. After the positive divergence forms, the second break above 20 confirms the divergence and a buy signal is given.

Example

In the IBM example above, it is clear that acting solely on overbought and oversold crossovers can generate false signals. Using crossovers of %D (slow) by %K (slow) can result in some good signals, but there are still whipsaws. By looking for divergences and overbought/oversold crossovers together, the 14-day Slow Stochastic Oscillator can produce fewer yet more reliable signals. The Slow Stochastic Oscillator produced 2 solid signals in IBM between Aug-99 and Mar-99. In Nov-99, a buy signal was given when the indicator formed a positive divergence and moved above 20 for the second time. Note that the double top in Nov-Dec (gray circle) was not a negative divergence -- the stock continued higher after this formed. In Jan-00, a sell signal was given when a negative divergence formed and the indicator dipped below 80 for the second time.

srry for the confusion, you mentioned a stolcastics "oscilator", this type of indicator is still fairly new to me, and i have never experimented with, or investigated the difference between the "normal" stolcastics, which is what i was most farmilliar with. thanks for the info.

prasxz
1259
prasxz  

hi

Hi,

Did u use forex system into stock system ?

Can u tell me which proven system on forex that can be used on stock prediction and has a good result ?

Thx

================

Forex Indicators Collection

Hercs
2957
Hercs  

Stochastics...........

EagleHawk, without any disrespect, you don't know what the Stochastic Oscillator (correct name and correctly spelled) is or does. It is painfully obvious from your reply to my friend Pip_Trip above. You should be thankful for people like him giving you such a detailed explanation and admitted that you were / are way off the line.

In this Forum one can learn an awesome amount by listening to what traders are saying and the likes of Pip_Trip and others that you will meet in your quest for knowledge are seldom found. Just make sure you don't miss them.

Rather be a fool for 5m then for the rest of your life. Do not reply unless you are sure of your facts - you are just leading people up the wrong path and others will just laugh at your ignorance.

No offense meant, but had you accepted the mere fact that you were wrong, it would have been better; however you justified your "knowledge"(sic) by saying that the Stochastics you have used, was NOT the same.

srry for the confusion, you mentioned a stolcastics "oscilator", this type of indicator is still fairly new to me, and i have never experimented with, or investigated the difference between the "normal" stolcastics, which is what i was most farmilliar with. thanks for the info.

There is only ONE Stocahstic Oscillator and I urge you to reread Pip_Trip's lesson above. It is a gem to behold and it is for free.

Start learning, stop participating until you know what you are talking about.

Best wishes for your learning career.

12
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