What is the stochastic oscillator? %K and %D in plain English
By SendPay Business · · 2 min read
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.
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.
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.
Where SendPay fits
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How do I work out the stochastic oscillator?
Paste high, low and close prices into the free calculator.
Stochastic oscillator calculator →Read next
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. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.