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Oscillators > Stoch - Reg

Article/Author: "Stochastics", Stuart Evens, S&C Magazine, Traders Tips, 09/1999

Download: Stoch.ela

File Includes:

Indicator - Stoch - Reg
Function - StochDreg
Function - StochDslow
Function - StochKreg
Function - StochKslow
Indicator - Stoch - Slow

Category: Indicator > Stoch - Reg

Description:

The Stochastic Oscillator compares where a security's price closed relative to its price range over a given time period. This is regular version of the oscillator. It is calculated according to this formula:

%K = (Close(today)-lowest low(5))100 / (highest high(5)-lowest low(5))


%D = AVG(%K,3)


Usage:

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.




Inputs:

Length - number of bars to use in calculation
SlowLen - number of bars to use in calculation

EasyLanguage Code:

Inputs: Length(5), SlowLen(3);

Plot1(StochKreg(Length), "%K-reg");
Plot2(StochDreg(Length, SlowLen), "%D-reg");