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What is the stochastic oscillator? %K and %D in plain English

By SendPay Business · · 2 min read

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The stochastic oscillator, popularised by George Lane, shows where the latest closing price sits within the range of recent highs and lows. It runs from 0 to 100.

How it is worked out

  • Over the last 14 periods (the usual setting), find the highest high and the lowest low.
  • %K = (latest close − lowest low) ÷ (highest high − lowest low) × 100.
  • %D is a 3-period average of %K. The slow version first smooths %K over 3 periods too.
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Reading it

A reading near 100 means the price closed near the top of its recent range; near 0 means near the bottom. Above 80 is commonly called overbought and below 20 oversold. Some people watch for %K crossing %D.

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The limits

In a strong trend the oscillator can stay above 80 or below 20 for a long time, so these levels don't mean a turn is due. Like other indicators it is built only from past prices.

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Where SendPay fits

SendPay doesn't offer trading. SendPay platforms let your customers hold GBP, EUR and USD and exchange between them at a fee you set, alongside transfers and branded Visa cards, powered by licensed partners.

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Questions people ask

How do I work out the stochastic oscillator?

Paste high, low and close prices into the free calculator.

Stochastic oscillator calculator →
What is Williams %R?

A close cousin of the stochastic, on a 0 to −100 scale.

Williams %R →
What is RSI?

Another momentum indicator, on a 0 to 100 scale.

What is RSI? →

Read next

Spotted a mistake or something out of date? and we'll fix it. How our guides are made

This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.