Fast Stochastic Crossing

The Fast Stochastic Oscillator is a tool used in technical analysis to measure the momentum of a stock's price movement. It does this by comparing the most recent closing price of the stock to the highest and lowest prices over a specified period, which is usually 14 periods.

The Fast Stochastic is calculated by taking the difference between the most recent closing price and the lowest price over the specified period, dividing that result by the difference between the highest and lowest prices over the same period, and then multiplying the result by 100 to produce a percentage value between 0 and 100.

Traders often use the Fast Stochastic to identify overbought or oversold conditions in a stock. If the Fast Stochastic rises above 80, the stock is considered overbought, while a fall below 20 is considered oversold. This information can be used by traders to look for potential price reversals or corrections in the stock's price.

This strategy is based on crossings in Fast Stochastic Oscillator. Typically a buy is generated when a %K (black) line is crossing a %D (red) line in an upward direction. When %K is crossing %D in a downward direction it is a sell signal.

Formula

IF STO%K >= STO%D
THEN GO LONG
ELSE
IF STO%K <= STO%D
THEN GO SHORT
where STO%K is %K fast stochastic oscillator;
where STO%D is %D fast stochastic oscillator;

Stock Research Links

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