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Non-Tech : Any info about Iomega (IOM)?
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To: FuzzFace who wrote (36753)11/20/1997 10:27:00 PM
From: KM  Read Replies (2) of 58324
 
Edwin: All Right . . . I'll quit watching "Married With Children" long enough to explain <GG>

From: ilhawaii.net

Part 3: Technical Analysis & Spread Trading

Subject: Stochastics

Stochastics simply attempt to indicate where the current price is as a percentage value in relation to the high and low extremes of price swings during a set time period. At this set time period the stochastics work on the assumption that an overbought condition exists when the stochastics is in the area above 50% and oversold when prices put the stochastics below 50%.
Traders generally use 70% or 30% for better signals and an 80 to 20% or 90--10% can also be used. The best way to find which indicator is to run the stochastics and see at what threshold works with the least false signals. Also, it may be necessary to adjust the set time period and or the sum of the days being used.

The basic calculation is this;

Sum of X # days of( Close - X # of days low)
----------------------------------------------------
Sum of X # days of( X days high - X # days low)

Example;

Sum of 3 days of the close minus the low of the last 10
days.
Divided by

Sum of 3 days of the 10 day high minus the 10 day low.

So if our high is 100 and the low is 80 for the last 10
days.

day 1 close = 95 minus 10 day low of 80 = 15
day 2 close = 90 minus 10 day low of 80 = 10
day 3 close = 85 minus 10 day low of 80 = 5
Sum 30

A three day sum of the high minus the low = 60
30/60 = 50%

Thus, the price range over the last 3 days of trading has been at 50% of the range over the last 10 days. The trick is to find what sum of days and what range of highs/lows most accurately matches the highs and lows of the stock or futures being followed, and in markets that are in a up or down trend, when to take only the buy or sell signals.
---------------

Virtually every technical analysis software title has the stochastics function built-in, along with the related indicator %R (which is the raw stochastic value charted on an inverted scale). I find stochastics/%R valuable when used with other turning point indicators, provided their speed matches the trading time frames.
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