In the late s, George Lane developed stochastics, an indicator that measures the relationship between an issue’s closing price and its. However, retirement means different things to different people, as Lane was up until 2 a.m. trading Italian bonds the night before he spoke with this reporter. Developed by George C. Lane in the late s, the Stochastic Oscillator is a momentum indicator that shows the location of the close relative to the high-low.

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How a high Stochastic is calculated Stochstics lowest low of the 5 candles: Sorry if this is such a noob question, I am just starting trading. Lane in the late s, the Stochastic Oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a set number of periods. Divergence-convergence is an indication that the momentum in the market is waning and a reversal may be in the making.

George Lane (technical analyst)

The idea stocyastics this indicator is that prices tend to close near the extremes of the recent range before turning points. Thank You Sir, its very informative info. If given, I would be so grateful. Notice how the oscillator can move above 80 and remain above 80 orange highlights. The offense has a higher chance of scoring when it crosses the yard line.

This is wrong and very dangerous! Developed by George C. If you continue to use this site we will assume that you are happy with it.

Stochastic oscillator

Think of it as the yard line in football. No matter how fast a security advances or declines, the Stochastic Oscillator will always fluctuate stohcastics this range.


Your research shown different dimension of technical analysis.

Notice how the stock moved to a new low, but the Stochastic Oscillator formed a higher low. Trading in the direction of the bigger trend improves the odds. Such a blessing and your labor to give us guidance how to use these indicators is indeed a Diamond-digged!

Overbought vs Oversold The misinterpretation of overbought and oversold is one of biggest problems and faults lwne trading. As with any other trading concept or tool, you should not use the Stochastic indicator by itself.

Traders could have acted when the Stochastic Oscillator moved above its signal line, above 20 or above Laane is interpreted as a signal to increase the current position, or liquidate if the direction is against the current position. Thank you so much Mentor Rolf. Very informative and off course in simple words.

Learn How To Use The Stochastic Indicator Step By Step – Tradeciety Trading Academy

Log In Sign Stochhastics Help. George Lane developed this indicator in the late s. Conversely, should a security trade near resistance with an overbought Stochastic Oscillator, look for a break below 80 to signal a downturn and resistance failure.

Lane also stodhastics this oscillator to identify bull and bear set-ups to anticipate a future reversal. Do not blindly believe what other people tell you, do your own research and build your trading knowledge. Smoothing the indicator over 3 periods is standard.

Land, there is a lot of wrong knowledge being shared among traders and even widely used tools such as the Stochastic indicator is often misinterpreted by the majority of traders. Similarly, the oscillator moved below 20 and sometimes remained below A move stochatsics 20 is needed to show an actual upturn and successful support test green dotted lines.


For more details on the syntax to use for Stochastic Oscillator scans, please see our Scanning Indicator Reference in the Support Center. There are three versions of the Stochastic Oscillator available on SharpCharts. Even though the stock could not exceed its prior high, the higher high in the Stochastic Oscillator shows strengthening upside momentum.

Click here to download this spreadsheet example. The Stochastic oscillator is calculated:. Bounces are part of downtrends that zigzag lower. A high Stochastic means that the price is able to close near the top and it keeps pushing higher.

Stochastic oscillator – Wikipedia

They have helped me immensely with my trading. This page was last edited on 10 Juneat The Stochastic Oscillator moved below 50 for the second signal and the stock broke support for the third signal. Retrieved 6 October As a rule, the momentum changes direction before price. As a bound oscillatorthe Stochastic Oscillator makes it easy to identify overbought and oversold levels. Securities can become overbought and remain overbought during a strong uptrend.

This suggests that the cup is half empty. Murphy’s book has a chapter devoted to momentum oscillators and lame various uses. The indicator can be placed above, below or behind the actual price plot.

This provides the earliest entry possible.