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Technical Indicators

Thu, Jun 5th, 2025
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The descriptions, formulas, and parameters shown below apply to both Interactive Charts and Snapshot Charts, unless noted. Please note that some of the parameters may be slightly different between the two versions of charts.
Studies noted with * are available only in Snapshot Charts and those noted with ^ are available only in Interactive Charts.
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Stochastic, Slow

Indicator Type: Standalone

The Stochastic Indicator was developed by George Lane in the early 1960's. It is based on the observation that as the price of an instrument increases, the daily closes tend to be closer to the upper end of the recent price range. Conversely, as the price decreases, the daily closes tend to be closer to the lower end of the recent price range.

The normal stochastic, like the slow stochastic study (which is also known as the full stochastic) generates two lines. They are %K and %D. The normal stochastic has overbought and oversold zones. Dr. Lane suggests using 80 as the overbought zone and 20 as the oversold zone. Others prefer 75 and 25.

There are three primary stochastic values:

  1. Raw stochastic - the most basic value representing the stochastic value for each period. Also known as raw K.
  2. %k - the first smoothing of the raw stochastic, usually with a 3-period simple moving average.
  3. %d - the smoothing of the %k value, usually with another 3-period simple moving average. Also known as slow K.

There are three parameters for stochastics:

  1. The number of periods over which the raw stochastic is calculated (14).
  2. The smoothing factor for the calculation of %K and %D (3).
  3. The type of moving average used in the smoothing. (MA)

The Slow Stochastic is a chart of the %k and the %d values. To calculate the stochastics:

Assuming parameters of 14,3 find the 14-period high, the 14-period low and the latest price.

The raw stochastic is calculated as (latest - 14-period low) / (14-period high - 14-period low) multiplied by 100. Therefore if the 14-period high was 200, the 14-period low was 100, and latest price is 150 (150-100)/(200-100)*100 = 50%

On the third period of data, the %k is the average of the raw values. After the 3rd period %k is the 3-period smoothed raw values (2/3 old %k + 1/3 new raw stochastic).

After 3 periods of %k, the %d is calculated as a 3-period smoothed version of %k.

Sample Chart:

Stochastics, Slow

Parameters:

  • Period1 - %K (14) - the number of periods used to determine the simple moving average for the %K value.
  • Period2 - %D (3) - the number of periods used to determine the simple moving average for the %D value.
  • Period3 (3) - The number of periods used in the Moving Average calculation for the study. 
  • Smoothing (MA) - determines the smoothing factor for the calculation of %K and %D, Options are MA=moving average; EMA=exponential moving average; SMA=smoothed moving average
  • Oversold Level (20) - draws a horizontal line at 20 to indicate where you move into oversold territory.
  • Center (50) - draws a horizontal line at 50 to indicate the midpoint.
  • Overbought Level (80) - draws a horizontal line at 80 to indicate where you move into overbought territory.
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