Momentum oscillators

Stochastic Oscillator

Stochastic compares the close with the high-low range of the last 14 candles (%K) and smooths it (%D), on a 0-100 scale.

How to read it

  • Above 80 is overbought, below 20 is oversold.
  • %K crossing above %D below 20 is a common bullish signal.
  • Like RSI, it can stay overbought in a strong trend.

Settings

Default 14, 3, 3.

Example rule to test

Scan idea: stocks where %K crossed above %D while below 20.

Common mistake

Taking every cross in the middle zone (40-60), where signals are weak.

Try it free on iTradeChart

For learning only. Backtests use past data and do not guarantee future results. Not investment advice.