A stock stochastic is a calculated number based on recent price movements of a stock. It is used by technical analysts, who believe that they can reliably predict stock prices by examining historical price and volume patterns. A stochastic oscillator is a buy/sell indicator that compares a stock stochastic against its three-day moving average. Technical analysis is controversial and many detractors claim it is useless or worse.
Inputs to the Calculation
To compute a stochastic, you must first decide on the length and number of periods to use. A common choice is the most recent 14 periods of one day each. You must determine three prices for the time frame: the highest high, the lowest low and the current close. Highs and lows are the intra-day top and bottom prices in any one period, so that the highest high is the top intra-day price in the 14-day time frame and the lowest low is the bottom price.
The Stock Stochastic Formula
The stock stochastic, %K, is a fraction multiplied by 100. The numerator is the current closing price minus the lowest low. The denominator is the highest high minus the lowest low. The stochastic indicates where the current closing price sits relative to the price range for the time frame. For example, if the highest high for a stock over 14 days was 110 and the lowest low was 100, the denominator equals 10. If the current closing price is 108, the stochastic is 80 -- that is, 100 times the result of 8 divided by 10.
Plotting the Oscillator
The stochastic is called an oscillator because it bounces between values of zero and 100. To use it as a technical indicator, you must first take its three-period simple moving average. You do this my summing the last three readings of %K and dividing by 3, giving the moving average called %D. You plot the values of %K and %D on a chart with time as the x-axis and price as the y-axis. The lines formed by connecting the daily readings of %K and %D will periodically cross one another, which sometimes creates a signal to buy or sell the stock.
Interpreting the Oscillator
The originator of the stochastic oscillator, George Lane, interpreted buy and sell signals as stemming from divergent patterns between %K and %D at a crossover point. For example, a "buy" signal occurs if %K suddenly moves from below to above %D while %D is still moving lower. A sell signal would be the opposite. Over time, others have extended the oscillator by using different moving averages and by interpreting %K to indicate and "oversold" or "overbought" stock, meaning stocks that might be about to reverse their trends.
- StockCharts: Stochastic Oscillator
- American Association of Individual Investors: ID'ing When to Buy and Sell Using the Stochastic Oscillator
- Massey University: Technical Analysis Around the World: Does It Ever Add Value?
- George Pruitt. "The Ultimate Algorithmic Trading System Toolbox + Website: Using Today's Technology To Help You Become A Better Trader." John Wiley & Sons, 2016.
Eric Bank is a senior business, finance and real estate writer, freelancing since 2002. He has written thousands of articles about business, finance, insurance, real estate, investing, annuities, taxes, credit repair, accounting and student loans. Eric writes articles, blogs and SEO-friendly website content for dozens of clients worldwide, including get.com, badcredit.org and valuepenguin.com. Eric holds two Master's Degrees -- in Business Administration and in Finance. His website is ericbank.com.
Hifadhi stochastic ni idadi mahesabu kulingana na harakati za hivi karibuni bei ya hisa. Inatumiwa na wachambuzi wa kiufundi, ambao wanaamini kwamba wanaweza kutabiri bei za hisa kwa kuaminika kwa kuchunguza mifumo ya kihistoria ya bei na kiasi. Stochastic oscillator ni kipimo cha ununuzi na uuzaji ambacho kinalinganisha hisa za hisa na wastani wake wa siku tatu. Uchambuzi wa kiufundi ni utata na wachambuzi wengi wanadai ni bure au mbaya zaidi. Kuingiza kwa Hesabu Ili kuhesabu stochastic, lazima kwanza kuamua juu ya urefu na idadi ya vipindi vya kutumia. Kwa kawaida, kila siku ina kipindi cha 14 cha mwisho cha siku moja. Kuna bei tatu za kuweka kwa muda: ya juu, ya chini, na ya karibu. Kiwango cha juu na cha chini ni bei za juu na za chini za ndani ya siku katika kipindi chochote, kwa hivyo kiwango cha juu ni bei ya juu ya ndani ya siku katika muda wa siku 14 na kiwango cha chini ni bei ya chini. Stochastic ni asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia ya asilimia. Mtaalamu ni sasa kufunga bei minus chini ya chini. Mtaalamu ni juu ya juu minus chini ya chini. Stochastic inaonyesha ambapo sasa kufunga bei anakaa kuhusiana na mbalimbali ya bei kwa ajili ya muda frame. Kwa mfano, ikiwa kiwango cha juu cha hisa kwa siku 14 kilikuwa 110 na kiwango cha chini cha chini kilikuwa 100, mtoaji ni sawa na 10. Kwa mfano, ikiwa bei ya kufungwa ya sasa ni 108, stochastic ni 80 - ambayo ni mara 100 ya matokeo ya 8 kugawanywa na 10. Mfano wa oscillator ni stochastic, ambayo ni oscillator ya kawaida ambayo hutegemea kiwango cha oscillator. Ili kuitumia kama kiashiria cha kiufundi, lazima kwanza uchukue wastani wake wa kuhamisha rahisi wa vipindi vitatu. Kwa mfano, kwa kuongeza jumla ya matokeo ya mwisho ya %K, na kugawanya kwa 3, unaweza kupata wastani wa kusonga unaoitwa %D. Kwa mfano, unaweza kuweka thamani ya %K na %D kwenye chati na wakati kama mhimili wa x na bei kama mhimili wa y. Mstari ulioundwa kwa kuunganisha usomaji wa kila siku wa %K na %D utavuka mara kwa mara, ambayo wakati mwingine huunda ishara ya kununua au kuuza hisa. "Mwanzilishi wa oscillator stochastic, George Lane, alitoa ishara ya ""kununua na kuuza"" kama inayotokana na mifumo tofauti kati ya K na D katika hatua ya msalaba." Kwa mfano, ishara ya kununua hutokea ikiwa %K kwa ghafula inahama kutoka chini hadi juu ya %D wakati %D bado inahama chini. Ishara ya kuuza ingekuwa kinyume. Kwa muda, wengine wameongeza oscillator kwa kutumia wastani tofauti na kwa kutafsiri %K kuonyesha na "kuuza kupita kiasi" au "kununua kupita kiasi" hisa, maana hisa ambazo zinaweza kuwa karibu kubadilisha mwenendo wao. "Stochastic Oscillator: ""Mfano wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti wa Utafiti.""" - George Pruitt. "The Ultimate Algorithmic Trading System Toolbox + Website: Kutumia Teknolojia ya Leo Kukusaidia Kuwa Mfanyabiashara Bora". John Wiley & Sons, 2016 Eric Bank ni mwandishi mwandamizi wa biashara, fedha na mali isiyohamishika, freelancing tangu 2002. Ameandika maelfu ya makala kuhusu biashara, fedha, bima, mali isiyohamishika, uwekezaji, annuities, kodi, kurekebisha mikopo, uhasibu na mikopo ya wanafunzi. Eric anaandika makala, blogi na maudhui ya tovuti ya SEO-rafiki kwa wateja wengi ulimwenguni kote, pamoja na get.com, badcredit.org na valuepenguin.com. Eric ana digrii mbili za uzamili - katika Utawala wa Biashara na katika Fedha. Tovuti yake ni ericbank.com.