I tryed to collect everything about one indicator: Stochastic Oscillator.
"Technical Analysis from A to Z":
Sto.chas.tic (sto kas'tik) adj. 2. Math. designating a process
having an infinite progression of jointly
distributed random variables.
--- Webster's New World Dictionary
The Stochastic Oscillator compares where
a security's price closed relative to its
price range over a given time period.[/CODE]
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:
Buy when the Oscillator (either %K or %D)
falls below a specific level (e.g., 20) and
then rises above that level. Sell when
the Oscillator rises above a specific level
(e.g., 80) and then falls below that level.
Buy when the %K line rises above
the %D line and sell when the %K line
falls below the %D line.
Look for divergences. For example,
where prices are making a series of new highs
and the Stochastic Oscillator is failing to surpass
The Stochastic Oscillator has four variables:
This is the number of time periods
used in the stochastic calculation.
%K Slowing Periods.
This value controls the internal smoothing of %K.
A value of 1 is considered a fast stochastic;
a value of 3 is considered a slow stochastic.
This is the number of time periods used
when calculating a moving average of %K.
The moving average is called "%D" and is
usually displayed as a dotted line on
top of %K.
The method (i.e., Exponential,
Simple, Time Series, Triangular, Variable,
or Weighted) that is used to calculate %D.
The formula for %K is:
For example, to calculate a 10-day %K,
first find the security's highest-high and
lowest-low over the last 10 days.
As an example, let's assume that during
the last 10 days the highest-high was 46 and
the lowest-low was 38--a range of 8 points.
If today's closing price was 41,
%K would be calculated as:
The 37.5% in this example shows
that today's close was at the level of 37.5%
relative to the security's trading range over
the last 10 days. If today's close was 42,
the Stochastic Oscillator would be 50%.
This would mean that that the security
closed today at 50%, or the mid-point,
of its 10-day trading range.
The above example used a
%K Slowing Period of 1-day (no slowing).
If you use a value greater than one,
you average the highest-high and
the lowest-low over the number of
%K Slowing Periods before performing
A moving average of %K is then
calculated using the number of time
periods specified in the %D Periods.
This moving average is called %D.
Thanks newdigital. Been looking at this for decads. A very complete summary for me. Again, big thank you for you.
I have got this picture from another topic:https://www.mql5.com/en/forum/177227, it is called TTM Stochastic and it looks very smooth and intersting.Does anybody have the formula of TTM Stoch indicator?
Shot at 2007-07-02
Thanks for the nice work. Wish there is something for all indicators....
hi mystified, i only have this one. hopely this is what are you looking for.
thx a lot ND
i think i have seen stoch with fibo line here before.did someone have it.
one more thing. what is the best setting for stoch.
i usualy use 14,3.3 for my stoch setting. does anyone use different setting.
For me 5,3,3 is the best ..
Forex Indicators Collection
We have Parabolic SAR indicator https://www.mql5.com/en/forum/177358
Momentum indicator https://www.mql5.com/en/forum/176430 and
It will be more of course.
I think best settings depens on your grasp of timing.I find 14,3,3 settings quite useful.But then again this setting gives late signals sometimes.This is when I aplly 8,3,3 settings and compare it with 14,3,3 settings.There is no perfect settings really but I find the middle of these two settings quite useful.
Below you'll find a chart example of the stochastic settings I use. The first chart is the way I use the settings, the second is the same, but with every stochastic split from the rest.
The basic setting is 8-3-3 (i.e. slow stochastic). As mystified points out, settings like 5-3-3 or 14-3-3 (or 13-3-3) have all their own qualities and possibilities. Personally, I'm most comfortable with 8-3-3 and have developped a whole range of strategies with and around it.
I combine the 8-3-3 stochastic with 3 multiples of it, similarly to using a MTF (Multiple Time Frame) version (if you multiply the basic setting by 2, then for a 30m chart, you get more or less exactly the levels of a 1 hour chart).
These various stochastics I then stack all together in one window, and combine them with other indicators, like CCI, MACD, RSI, DeMarker, etc... There's a whole lot of great signals that you can take from these, and I worked out numerous strategies which I'm trading or forward testing at the moment (too many, and too versatile to mention here - I'll just point out that it's not a matter of simply acting on one standard type of oversold-/bought situation, there's many variations of it, depending on the levels of the various different stochastics and other indicators).
One of the things I found is that the best levels to go by should be fibonacci levels. Interestingly, I recently saw another poster on this forum use these on his charts, the only difference being that I also use the 16.18/83.82 level, for maximum oversold/-bought levels.
Explore and enjoy!
You have done a very good job FX samurai. I applied the stochs to GBP and found very interesting things. Thanks to share with us.
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