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Formula for Slow Stochastic


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Formula for Slow Stochastic

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  #1 (permalink)
Detroit, Michigan
 
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I've spent some time researching this topic but cannot find what I'm looking for. NT standard stochastic indicators (and 3rd party) are not it either.

Looking for the formula for Slow Stochastic indicator mostly used in stock trading but very much relevant for futures (as I've seen it on certain futures platforms).

FYI, the standard NT stochastic indicator uses K, D, and smooth.

The slow stochastic indicator uses K, D, and length (yes they are different).

Attached is a screenshot for the slow stochastic indicator with settings that I seek the formula for that I could then program for NT use.

Thanks in advance.

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  #3 (permalink)
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Bump bump....can someone lend a hand?

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  #4 (permalink)
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I have ZERO ability to code, but this link should give you enough information. Breaks down the formula step by step.

Stochastic Oscillator [ChartSchool]

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  #5 (permalink)
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My NT programmer checked @drm7 link and the formulas are the same as NT's stochastic formulas (Stochastic Fast and Stochastic) so he doesn't know what to make of it.

Can anyone else help to find the correct slow stochastic formula for the following attributes:

Length = 14 (this is NOT smooth BUT length)
%K Period = 3
%D Period = 5

These attributes are in the Yahoo Finance screenshot in the first post of this thread.

Any help would be greatly appreciated.

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@TrendTraderBH
Is this right?
Slow Stochastic formula from Computer Analysis of the Futures Market by Charles Le Beau and David Lucas

Edit: probably not, on closer reading I see it mentions a smoothing constant.

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  #7 (permalink)
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Not sure why this is so difficult. I sent a message to Yahoo Finance to see if they can give me the underlying formula but not sure I will get a response.

Funny just as I wrote the above checked and got an answer from Yahoo Finance - sent to my programmer to see if it contains the answer. Here is Yahoo Finance's response below and also towards the end as it pertains to the "Length" parameter:



Hi -

A stochastic oscillator is a momentum indicator that compares where a security's price closed relative to its price range, for a given period. Closing levels that are consistently near the top of the range indicate accumulation (also known as buying pressure): this can be interpreted to mean the security is overbought. Closing levels near the bottom of the range indicate distribution (also known as selling pressure): you can interpret this to mean the security is oversold.

In Yahoo Finance charts, you can use 3 types of stochastic indicator: Fast, Slow, and Full Stochastic.

Fast Stochastic

The Fast Stochastic plots two indicator lines: the %K and the %D.

%K shows the current closing price as a percentage of the high-low range, for the given period (n). Because %K is a percentage it will always be between 0 and 100.
%D is a 3-period simple moving average of %K. This is usually plotted alongside %K to act as a signal or trigger line.

Formulas and definitions

%K = 100 X ([Recent Close - Low (n)] / High (n) - Low (n)])

Recent Close = the security's closing price.
Low(n) = the lowest low in n periods.
High(n) = the highest high in n periods.
n = The number of trading periods. If the trading periods are measured in days, the n value is the number of days.
%D = 3 - Period Simple Moving Average of %K.

Slow Stochastic

Based-on the fast stochastic, the Slow Stochastic takes the %K plotted by the fast stochastic and applies a 3-period simple moving average to it to form the Slow Stochastic's %K. Identical to the Fast Stochastic's formula, the Slow Stochastic's %D is a 3-period simple moving average of its %K.

Formulas and definitions

%K (slow) = 3-period SMA of %K (fast)
%D (slow) = 3-period SMA of %K (slow)

Full Stochastic

The full stochastic is customizable. It allows you to apply an n-period (any number you like) simple moving average to the %K for smoothing and an n-period simple moving average to the %D. With it you can plot a Fast, Slow, or customized Stochastic Oscillator.

Formulas and definitions

%K (full) = n-period SMA of %K (fast)
%D (full) = n-period SMA of %K (full)

Stochastic indicators in Yahoo Finance charts

In Yahoo Finance charts, you can change 3 important parameters for a stochastic indicator:

Length - This is the period of the stochastic oscillator. Depending on the chart timeframe, the period differs in meaning. In other words it could be an intraday timeframe, or days, weeks, or months.

%K Period - This controls the smoothing of %K. This value is the period that's used in the Simple Moving Average applied to the %K.

For a Fast Stochastic Oscillator, leave %K Period at 1.
To change to a Slow Stochastic, raise %K Period to 3.

%D Periods - The number of time periods used when calculating an SMA of %K.

It's typical to leave this value at 3. Raising it will produce more smoothing in %D.

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