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 bisa bicara anything

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orangtua



Posts : 117
Join date : 2008-08-06

PostSubject: bisa bicara anything   Tue Aug 26, 2008 8:51 pm

bagaimana ya
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monica



Posts : 1
Join date : 2008-08-26

PostSubject: Stochastic   Tue Aug 26, 2008 11:02 pm

In the stochastic there are red line, blue line, and dotted black.
Which one we should choose the blue line or the dotted black? The triggering point is it blue line cut red line from bottom or dotted black cut red line from bottom means the price is trending up. Thank you.
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orangtua



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Join date : 2008-08-06

PostSubject: Re: bisa bicara anything   Wed Aug 27, 2008 8:53 am

monica wrote:
In the stochastic there are red line, blue line, and dotted black.
Which one we should choose the blue line or the dotted black? The triggering point is it blue line cut red line from bottom or dotted black cut red line from bottom means the price is trending up. Thank you.

Let me try to explain this stoc indicator in a summarize way first.

Depends on one's preference, some take the blue line (%D) crossing the red line (smoothed %D) from below upwards as a bullish signal and the opposite as a bearish signal. Some others take the dotted black (%K) crossing the blue line (%D) as a signal too.

Now for the more techincal explanation for deeper understanding and for those who want to understand the why?

Stochastic is made up of 2 main components, the %K line and the %D line. The %K line whose values ranges form 0 to 100 is calculated from the recent closing prices form the specified period. The value of %D is derived from taking the moving average of %K over a specified period, eg 3days. This is also known as the fast stochastic, %D (fast) and %K (fast). However, the fast stochastic quick reaction to price action causes many frequent fail buy/sell signals. Hence, in order to render the signals more efficient, the slow Stoc was developed. The %K (slow) line is the same as the %D (fast) line whilst the %D (slow) line is the 3days moving average of the %K (slow) line. This is termed as the Full Stcok Oscillator (FULL STO) which consist of the %D (fast), %D (slow) and %K (full) and its uniqueness is the usage of 'smoothing factor' for the initial %K line to plot the %K (ful) line. While it is important to know how an indicator is built, we need to understand the way Stoc can be used.
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