Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (12817)	3/11/2002 1:32:20 AM
From: Warpfactor	Read Replies (3) \| Respond to of 23153

Hi Dabum, I would like to discuss "Stochastics". I had asked a few people about this indicator, basically what I got was "it's bullish when the fat line crosses over the skinny line, and bearish when the fat line crosses under the skinny line.". So I researched it myself. Both Fast and Slow Stochastics have two numbers that are generated, called %K and %D (per Stock Charts tutorial). In order to get %K, you need to look at the high stock price, the low stock price and the closing stock price from the previous 14 days of trading. %K represents the Fat line on Fast Stochastic chart. It is calculated by the following formula: 100 x ((current close - 14-day low) / (14-day high - 14-day low)) So if for example JNPR had a low in the past 14 days of 9 and a high of 14. And last Friday's close was 13, the JNPR's %K would come out to (13-9)/(14-9) = (4/5) = .8 or 80% The other calculation, %D, is a 3-day moving average of %K. lets say the past three days that %K checked in at 70%, 75% and 80%. Then %D would be the average, or 75%. Here's an actual Fast Stochastic for JNPR: stockcharts.com[h,a]daclyiay[pb10!b21!f][vc60][iut!Li14,3]&pref=G As near as I can tell, Fast Stochastics are next to worthless because the daily %K's will give too many false signals. So Slow Stochastics were invented. With Slow Stochastics, %K is smoothed out so it isn't so herky-jerky. Slow Stochastics uses a three day moving average of %K for its value of %K. Thus %K in Slow Stochastics is equivalent to %D in Fast Stochastics. %D in Slow Stochastics is a 3-day moving average of %K. Thus %D, the skinny line, is a moving average of a moving average . This seems alot like doing integration in Calculus. Here's JNPR Slow Stochastics: stockcharts.com[h,a]daclyiay[pb10!b21!f][vc60][iut!Lh14,3]&pref=G So here I stand. I understand how slow stochastics are generated, but don't really know how to use them to my advantage. My questions to you and other Stochastics users: 1) How do you separate out the false buy signals (or sell signals) from the real McCoys? How do you know when to buy JNPR?? 2) I've heard people talk about changing some of the parameters. Instead of 14 days, use 17 or 18 or whatever. Instead of a 3-day moving average use something else. Is this stock specific? Is a high-beta tech best suited for larger parameters to provide cleaner signals? 3) As a price based technical indicator, are there other indicators (volume-based) that are good to use for confirmation?? Would appreciate any help you or other can provide?? Warp