Description

• Stochastic is a momentum indicator
• It is a momentum indicator that shows the location of the current close relative to the high/low range over the last n-time periods
• The values range from 0 to 100%
• In order to smoothen it, Moving Average (MA) of Stochastic is calculated which is known as Stochastic %D

Interpretation

• Readings below 30 indicate oversold condition
• Readings over 70 indicate overbought condition
• It compares distance of Last rate from its High & low for period of bars examined
• If %K = 0, means that Close Rate = Low rate and if %K = 100 means Close Rate = High Rate

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• % K Bars
• % K Slow Bars
• % D Avg Type
• % D Avg Bars

Returns/Output

Stochastic value of the stock for the specific period

Formula

%K=100*(Recent Close-Lowest Low(n)/Highest High(n)-Lowest Low(n))
%D=3-Period Moving Average of %K
(n)=Number of periods used in calculation