Stochastic - Manual Calculation Guide

Stochastic indicator consists of - %K and %D.

To calculate stochastic –

1.  Calculate the value of %K

%K = (C_tod – L_n) / (H_n – L_n) x 100

Where C_tod = today’s close

L_n = the lowest point for the selected number of days

H_n = the highest point for the selected number of days

n = the number of days for stochastic as selected by the user

            

The standard value of ‘n’ used is 5, but the trader might experiment with different values. A lower value helps catch more turning points. A higher value helps catch major turning points.

2.  Calculate the value of %D

%D = [3 day sum of (C_tod – L_n)] / [3 day sum of (H_n – L_n)] x 100

The values of %K and %D are then plotted on the same chart

Stochastic is designed to fluctuate between 0 and 100.

STOCHASTIC  IS CALCULATED AUTOMATICALLY THESE DAYS USING COMPUTERS

Just in case, if you want to try calculating it manually !

Click to Calculate Stochastic Manually