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Stochastic Oscillator, the beginning

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Sergey Golubev
Moderator
94682
Sergey Golubev  

I tryed to collect everything about one indicator: Stochastic Oscillator.

"Technical Analysis from A to Z":

Overview

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]

Interpretation

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

its previous highs.

[CODE]Calculation

The Stochastic Oscillator has four variables:

%K Periods.

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.

%D Periods.

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.

%D Method.

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

the division.

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.

The Stochastic Oscillator always ranges between 0% and 100%. A reading of 0% shows that the security's close was the lowest price that the security has traded during the preceding x-time periods. A reading of 100% shows that the security's close was the highest price that the security has traded during the preceding x-time periods.
Files:
Sergey Golubev
Moderator
94682
Sergey Golubev  

Step stochastic indicator is on this post. This is the only correct (non-repainting, non-deformed) version of step stochastic that exist in any platform.

Divergence using Stochastic: some general information about it was collected on this thread https://www.mql5.com/en/forum/175886 and some of them are on this post.

painting the past: Stochastic is not paiting the past. But we need in some systems for this indicator to be painted the past. Read some exotic explanation/request https://www.mql5.com/en/forum/173249

how to understand the price movement using 3 Stochastic indicators:

- template attached (M5 timeframe). It was taken from asctrend M5 informational template from elite section here.

- some other informational templates about price movement understanding are here.

Multi Timeframe Stochastic:

- MTF stochastic momentum indicator is here;

- MTF Stochastic is here, and here, and here, and here, and here, and here, and here (#MTF Stochastic v. 2.0);

- Stochastic_Standard_4TF_cja updated indicator: this post.

Stochastic with alert is #MTF_Stochastic1.1 with alert is here; #MTF Stochastic with alert is here; stochastic with alert EA is here, stochastic with alert thread.

- Many Stochastic indicators in one page collected: is here.

StochHistogram indicator is here.

- StochHistogram indicators with alert (2 indicators) are on this page.

- Color Stochastic indicator is here and here and here.

- StochCandles_80_20 indicator is here.

Files:
Sergey Golubev
Moderator
94682
Sergey Golubev  

Stochastic Momentum Indicator (Index):

- original thread is here;

- fixed indicator is here.

Stochastic filter indicator is here.

Stochastic Bar type MTF indicators: original thread.

On Chart Stochastic: indicator on the main window.

Stochastic tape indicator is on this page.

Stoch Signal: thread with good indicator by cja.

AllStochastics indicator: good MTF indicator developed by Igorad.

Blau's double smoothed stochastic is on this post.

Stochastic placed in chart window is on this post.

Sergey Golubev
Moderator
94682
Sergey Golubev  

EAs:

- Stoch EA is on this thread;

- Stochastic EA is here;

- Stochastic v1 EA is here;

- stoch_21 EA is here;

- Stochastic Sample EA is here;

- Stoch-Hellkas EA is here.

-StepStochCross EA. Elite section thread is here.

- Advice EA-Stoc Guru: public thread.

- Stochastic with RSI filter - StochEA: public thread.

- StochEA v0.1: original thread.

- StoIK EA - Stoch\I-Trend: thread with few versions of the EA using i-trend indicator.

Trading systems based on Stochastic:

- A simple idea trading system is here;

- Stoch trading system is here and EA is here;

- ZerolagStochs system is here;

- Stochastic in BrainSystem: the thread is here and here;

- Cycles witch stochastic: elite section thread.

All John Ehlers Indicators is here (including Fisher Transform over Stochastic Oscillator, and so on).

Reverse Divergence using Stochastic indicator is here.

Stoch Signal: thread about how Stochastic's working with some good indicators is here.

Overbought/oversold condition with Stochastic: small thread with good indicators is here.

Bob Davids
1981
Bob Davids  

Thanks newdigital. Been looking at this for decads. A very complete summary for me. Again, big thank you for you.

Regards

David

newt
126
newt  

thanks alot

FXSamurai
91
FXSamurai  

Great topic, indeed. The stochastic indicator is presently one of my favorites It's just that it takes a while to get a real understanding of what it can do for you. For me the lights went on once I understood that you should not just use it as an overbought/-sold indicator, but also as a momentum indicator, where you take certain levels of K and/or D as indications of a trend being strong/weak, such as when being above/below 80/20.

Another great article about this indicator can be found at http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:stochastic_oscillator

Especially for Slow versus Fast versus Full Stochastics.

This following phrase of the first post had me wondering for a moment:

The Stochastic Oscillator always ranges between 0% and 100%.

A reading of 0% shows that the security's close was the lowest price

that the security has traded during the preceding x-time periods.

A reading of 100% shows that the security's close was the highest price

that the security has traded during the preceding x-time periods.

Since I use slow stochastics, this puzzled me as I didn't find the 100% and 0% values as the quote suggests. In fact it applies to fast stochastics, and only occasionally occurs on slow stochastics.

Attached is a chart example that should make this point immediately clear. Upper stoch is fast, lower stoch is slow.

Take care!

xyz1453
225
xyz1453  

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

et_phonehome_2
1304
et_phonehome_2  

ND

Thanks for the nice work. Wish there is something for all indicators....

ET

maidi hidayat
17
maidi hidayat  

hi mystified, i only have this one. hopely this is what are you looking for.

@ND

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.

regards

HP

Files:
ttmstoch.mq4 5 kb
prasxz
1269
prasxz  

hi

holy_phoenix:
hi mystified, i only have this one. hopely this is what are you looking for.

@ND

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.

regards

HP

For me 5,3,3 is the best ..

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