this is a oscillator and you should know what that means ( https://bitcointalksearch.org/topic/oscillator-vs-indicator-know-them-before-you-speculate-131184 ) sell on top X below the line, buy on bottom X above the line
some copy paste formulas
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%K = (Current Close - Lowest Low)/(Highest High - Lowest Low) * 100
%D = 3-day SMA of %K
Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%K is multiplied by 100 to move the decimal point two places
%D = 3-day SMA of %K
Lowest Low = lowest low for the look-back period
Highest High = highest high for the look-back period
%K is multiplied by 100 to move the decimal point two places
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Fast %K = %K basic calculation
Fast %D = 3-period SMA of Fast %K
Fast %D = 3-period SMA of Fast %K
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Slow %K = Fast %K smoothed with 3-period SMA
Slow %D = 3-period SMA of Slow %K
the most used stochastic is the Slow version and the normal version is SC come under name of FastSlow %D = 3-period SMA of Slow %K
when you want to use SS ? mostly on small periods of time, why ? because FS go nuts
http://yfrog.com/obaevmp
in larger periods of time FS is more sensible because of the way is calculated so is "safer to use it"
http://yfrog.com/h81m6wp
how to make FS more "friendly" ?
well instead of last price from the bar use AVG OHLC and instead of SMA use Weighted MA this reduce the number of signals you get, this changes leave the FS on a middle ground between default FS and default SS
the above chart with altered FS
http://yfrog.com/od8iskp
Stochastic RSI
this is a oscillator based on other oscillator
copy paste formula
Quote
StochRSI = (RSI - Lowest Low RSI) / (Highest High RSI - Lowest Low RSI)
what this means ? in plain words it takes RSI past values and compare them to actual value making this oscillator to be placed on momentum category, so it goes to top and bottom very fast, when you look at StochRSi u dont look at price chart you look at RSI itself
Does one buy/sell based on this ? nope
so what's the point of this ? the slope of this indicator give information about changes in the RSI
when to use this ? on daily and above charts so you can do come front running for the rsi
example on a 7d chart, rsi is flat but StochRSI point down so is likely to see RSI going down
http://yfrog.com/kjrbntp