Understanding the Stochastic Oscillator and Divergence

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Understanding the Stochastic Oscillator and Divergence

Дивергенция и конвергенция на Форекс. Сигналы стохастика

Здравствуйте, уважаемые читатели блога Форекс трейдера profitov.net. В данной статье рассмотрим сигнал, который считается одним из самых сильных сигналов в техническом анализе — конвергенция и дивергенция стохастика.

Это продолжение статьи о стохастике осцилляторе. Предыдущая часть — Как настроить стохастик осциллятор

Сигналы стохастика

Основных типов сигналов, подаваемых индикатором, два: Перекупленность и перепроданность — первый, конвергенция и дивергенция — второй.

  1. Перекупленность и перепроданность. Когда линии индикатора входят в соответствующую зону, это дает основание полагать, что вероятен скорый разворот цены. Сигнал на продажи поступает, когда линии вошли в зону перекупленности, а затем начали снижение и пересекли уровень перекупленности сверху вниз, при этом красная пунктирная линия %D должна пересечь сплошную %K. Сигнал на покупки поступает, когда индикатор стохастик находится в зоне перепроданности, а затем начал повышаться и пересек уровень перепроданности снизу вверх, при этом пунктирная линия %D должна пересечь сплошную %K.
  2. Дивергенция и конвергенция. Дивергенция стохастика — расхождение. Периодически на графике можно увидеть следующее: цена движется в вверх, а индикатор движется в противоположную сторону. Это выглядит вот так: То есть происходящее на графике и в окне индикатора противоречит друг другу, цена демонстрирует новые максимумы, а индикатор начал снижение. Это и есть дивергенция, расхождение. Дивергенция стохастика является признаком скорого разворота котировок и сигналом на продажи.

Конвергениця — схождение. По сути то же самое, что и дивергенция стохастика, только наоборот. Цена демонстрирует новые минимумы, а показатели индикатора уже начали рост. Вот как это выглядит на графике:

Как и дивергенция, конвергенция является сигналом к развороту текущего тренда.

Однако не стоит сразу входить в рынок, увидев дивергенцию или конвергенцию. Данные сигналы не дают нам четкого понимания, когда именно ожидать разворота, они лишь указывают нам на скорую его высокую вероятность. Поэтому дивергенции и конвергенции стоит использовать в качестве подтверждающих сигналов для своих торговых стратегий, например фигур разворота тренда. Увидели формацию «Голова и плечи«, подтвержденную дивергенцией — открываем ордер по правилам фигуры, это как вариант. Аналогично и с любой другой торговой стратегией.

Вообще, конвергенции тоже часто называют дивергенциями. Это не то, чтобы ошибка, просто так прижилось, что слово дивергенция полюбилось всем больше. Я и сам предпочитаю использовать только это название, в том числе и для обозначения конвергенции. И действительно, принципиальной разницы нет, ведь оба данных сигнала говорят нам о развороте котировок.

A trader’s guide to the stochastic oscillator

The stochastic oscillator is a technical indicator that enables traders to identify the end of one trend and the beginning of another. Discover what the stochastic oscillator is and how to use it to predict market turning points.

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What is the stochastic oscillator?

The stochastic oscillator is a momentum indicator, which compares the most recent closing price relative to the previous trading range over a certain period of time. Unlike other oscillators, it does not follow price or volume, but the speed and momentum of the market.

The stochastic oscillator was developed by George C. Lane in the late 1950s. His theory was based on the idea that market momentum will change direction much faster than volume or price increases. Therefore, the stochastic oscillator is considered a leading indicator, which means it can be used to predict price movements and inform traders’ decisions.

How to calculate the stochastic oscillator

The stochastic oscillator is formed of two lines on a price chart: the indicator line (%K) and a signal line (%D).

To calculate the signal line, a trader will need to subtract the lowest price over the period from the most recent closing price. They will then divide this by the highest price over the period minus the lowest price. The formula for the stochastic oscillator is as follows:

The stochastic oscillator line is normally plotted over a period of 14 days, while the signal line is a three-day simple moving average (SMA) of the %K.

Now, let’s look at an example of company XYZ’s share price. From the chart below, we can see that the 14-period low was $50, while the high was $80. XYZ’s stock closed very near the period high, at $78. So, the stochastic oscillator line would be calculated as follows: [(78-50)/(80-50) x 100] = 93.3%.

This figure indicates that the closing price was extremely near the top of the asset’s 14-period trading range – we’ll go onto what this means in a moment.

How to use the stochastic oscillator in trading

To use the stochastic oscillator, it is first important to understand exactly what the readings are showing you.

The stochastic oscillator is a bound oscillator, which means it operates on a scale of zero to 100 – this scale represents an asset’s entire trading range during the 14 days, and the final percentage shows where the most recent closing price sits within the range. This makes it easy to identify overbought and oversold signals. Regardless of how quickly the market price changes, or how the market volume fluctuates, the stochastic oscillator will always move in this range.

If there is a reading over 80, the market would be considered overbought, while a reading under 20 would be considered oversold conditions.

If we continue our previous example, a reading of 93.3% would be considered extremely overbought during the 14-day period. Following stochastic oscillator theory, this implies that a price reversal would be impending. In fact, some people believe that a reading above 90 is extremely risky and warrants the closing of positions.

As we have seen, the stochastic oscillator is shown as two lines on the chart, the %K (the black line on the chart below) and the %D (the red dotted line below). When these two lines cross, it is a sign that a change in market direction is approaching. If %K rises above %D, it would be a buying signal – unless the values are above 80. And if %K falls lower than %D, then it’s seen as a selling signal – unless the values are below 20.

Bullish and bearish divergences

The most common use of the stochastic oscillator is to identify bullish and bearish divergences – points at which the oscillator and market price show different signals – as these are normally indications that a reversal is imminent. A bullish divergence occurs when the price records a lower low, but the stochastic oscillator forms a higher low. This shows that there is less downward momentum and could indicate a bullish reversal. A bearish divergence forms when the market price reaches higher highs, but the stochastic oscillator forms a lower high – this indicates declining upward momentum and a bearish reversal.

However, it is always important to remember that overbought and oversold readings are not completely accurate indications of a reversal. The stochastic oscillator might show that the market is overbought, but the asset could remain in a strong uptrend if there is sustained buying pressure. This is often seen during market bubbles – periods of increased speculation that cause an asset’s price to reach consistently higher highs.

This is why it’s vital for anyone using the stochastic oscillator to combine the readings with other technical analysis indicators and a comprehensive risk management strategy.

Bull and bear set-ups

The founder of the stochastic oscillator, George Lane, believed that divergence could also be used to predict bottoms or tops. He called this a bull or bear set-up, as the indicator would reach a top or bottom which preceded the market changing direction.

A bull set-up is the opposite of a bullish divergence. It occurs when the market price forms a lower high, but the stochastic oscillator reaches a higher high. Even though the asset itself did not reach a new high, the optimism from the indicator is a sign that the upward momentum is strengthening.

A bear set-up is the inverse of a bearish divergence. It happens when the market price forms a higher low, but the stochastic oscillator falls to a lower low. Even though the asset held its price, the indicator shows there is increasing downward momentum.

Stochastic oscillator vs relative strength index

The stochastic oscillator and relative strength index (RSI) are both momentum oscillators, which are used to generate overbought and oversold signals.

Despite both being used for similar purposes, to identify price trends, they are based on very different theories. The stochastic oscillator is based on the idea that that closing prices will remain near historical closing prices, while the RSI tracks the speed of the trend.

Both oscillators work on a zero to 100 scale, but their signals also vary. The RSI would indicate the market is overbought if it reaches above 70, while the stochastic oscillator would need to reach 80. And the RSI would consider the underlying asset undersold if the indicator was below 30, while the stochastic oscillator would need to fall to 20.

Stochastic oscillator summed up

How you choose to use the stochastic oscillator will depend on your personal preferences, trading style and what you hope to achieve. However, there are a few key points that everyone who uses this momentum indicator should know:

  • The stochastic oscillator is a momentum indicator, which compares the most recent closing price relative to the previous trading range over a certain period
  • It is a leading indicator, as it’s based on the idea that market momentum will change direction must faster than volume or price increases
  • The stochastic oscillator is formed of two lines on a price chart: the indicator itself (%K) and a signal line (%D)
  • The stochastic oscillator is a bound oscillator, which means it operates on a scale of zero to 100. A reading over 80 is an indication the market is overbought, while a reading under 20 shows oversold conditions
  • The most common use of the stochastic oscillator is to identify bullish and bearish divergences – points at which the oscillator and market price show different signals
  • It can also be used to identify bull and bear set-ups, points that indicate increasing momentum in the opposite direction
  • It is often likened to the relative strength index (RSI), another momentum indicator. However, the RSI is based on the speed of changing prices, rather than historical prices

Stochastic Divergence – индикатор для MetaTrader 4

Дивергенция на стандартном Stochastic с Alert’ом и выбором языка.

Присутствие на графике cтохастика не обязательно. Однако, если будет установлен стандартный cтохастик, то линии дивергенции будут рисоваться и на графике и на индикаторе, а индикатор будет использовать настройки стохастика.

Сплошной линией рисуется классическая, пунктирной линией обратная дивергенция.

Можно изменить цвет линий (переменные ColorBull и ColorBear), а также установить режим вывода и язык сообщения при возникновении дивергенции.

У меня почему-то сигнал и дивер соответственно запаздывают и появляются когда появляется третья свеча

У меня почему-то сигнал и дивер соответственно запаздывают и появляются когда появляется третья свеча

. это естественно, ведь должен образоваться экстремум, чтобы определить дивергенцию.

Диверы Ваш индикатор рисует по линии %К, а не по линии %D..или Вы просто не знаете или намеренно вводите всех в заблуждение.

Если не знаете, то для меня совершенно непонятно как можно создавать индикатор не потрудившись узнать как правильно работать с индикатором, просто просмотреть заметки на полях Лейна, который собственно и создал стохастический осцилятор, тем более его книжка есть в сети и на русском языке .

. В работе со стохастиком важно понимать, что имеется только ОДИН правильный сигнал. Этим сигналом является дивиргенция/конвергенция (расхождение) между %D и ценой акции, с которой вы работаете.

. да и о скрытых дивергенциях (чертятся у Вас пунктирными линиями) Лейн то же ничего не писал, так что возможность их отключения так же была бы не лишней .

Если же вы вводите людей в заблуждение намеренно, то какая Вам от этого польза .

Функции для обработки ордеров спотовых валютных пар, Spot Gold и Spot Silver с обработкой ошибок. Усилена OrderProcess(). Добавлены новые функции Lots, OrderCloseByRetracement, OrderModifyTS и OrderSendI. Версия два используется для запуска советников.

The stochastic indicator explained

The stochastic indicator is a momentum indicator developed by George C. Lane in the 1950s, which shows the position of the most recent closing price relative to the previous high-low range. The indicator measures momentum by comparing the closing price with the previous trading range over a specific period of time.

The stochastic indicator does not follow the price or volume of the underlying currency pair, but the speed and momentum of the price. This means that the stochastic indicator changes direction before the price itself and can thus be considered a leading indicator. The most important signals that Lane identified are the bullish and bearish divergences that form on the stochastic indicator, which can anticipate upcoming price reversals. However, as the stochastic indicator oscillates within a range, it can also be used to identify overbought and oversold price levels.

Although the stochastic indicator can be used in any financial market, it is especially popular among Forex traders and this article will focus on the Forex market.

The calculation of the stochastic indicator

The stochastic indicator is drawn with two lines on the chart; the indicator itself (%K) and a signal line (%D) which represents the 3-day simple moving average of %K. When these two lines cross, traders should look for an approaching trend change. A downward crossing of the %K-line through the signal line indicates that the current closing price is closer to the lowest low of the specified time period of the indicator than it has been in the previous three sessions. This is considered a bearish signal, while the opposite of this is considered bullish.

The stochastic indicator is calculated using the following formula:

%K = (Most Recent Closing Price – Lowest Low) / (Highest High – Lowest Low) × 100

%D = 3-day SMA of %K

Lowest Low = lowest low of the specified time period

Highest High = highest high of the specified time period

The default setting for the stochastic indicator is 14 periods and it can be applied to any timeframe; such as daily, weekly, or even intraday. The 14-period setting means that the %K line uses the most recent closing price and the highest high and lowest low over the last 14 periods. As said earlier, the standard setting for the %D line is a 3-period SMA of the %K line.

Let’s see how the stochastic indicator is calculated through an example. The following chart shows the EURCAD chart with the stochastic indicator applied to it using standard settings.

The indicator measures the last 14 periods to find the highest high (1.4800) and lowest low (1.4480) which are used in the calculations.

%K = [(1.4670 – 1.4480) / (1.4800 – 1.4480)] × 100

= (0.019 / 0.032) × 100 = 0.59 x 100 = 59

With the current closing price of 1.4670, the %K line has a value of 59 (as can be seen in the indicator window below the chart).

How to read the stochastic indicator

As a range-bound indicator, the stochastic oscillator can be used to identify overbought and oversold market conditions. A reading over 80 reflects overbought market conditions, and a reading below 20 reflects oversold market conditions. The stochastic indicator itself can range only from 0 to 100, no matter how fast the price of the underlying currency pair changes. In a standard 14-period setting, a reading above 80 indicates that the pair has been trading near the top of its trading range over the last 14 periods, while a reading below 20 indicates that the pair has been trading near the low of its trading range over the last 14 periods.

It is important to note that oversold readings are not necessarily bullish, just like overbought readings are not necessarily bearish. During a sustained uptrend or downtrend, the stochastic indicator can remain in the oversold or overbought area for a long period of time. It is, therefore, advised to always trade in the direction of the trend and wait for occasional oversold readings during uptrends and overbought readings during downtrends.

How to use the stochastic indicator

The stochastic indicator is popularly used to trade oversold and overbought conditions, as well as bullish and bearish divergences. The following example shows how to trade oversold conditions during an established uptrend, making trades in the direction of the trend.

Points (1), (2), and (3) show oversold market conditions while the EURCAD pair is in an overall uptrend. Those oversold conditions are created with each correction of the pair, signaling that the uptrend is likely to continue. A possible trading strategy would be to enter when the %K line crosses the signal line from below, with a Stop Loss level just below the previous swing low. It is also important to wait for additional confirmation signals; such as candlestick patterns, as momentum indicators are known to throw false signals from time to time.

Divergences are used to determine tops and bottoms of trends, and to decide on when to enter and exit a position. In this regard, divergences are a leading indicator of future price action.

Normally, both the price and the technical indicator should move in the same direction. A divergence in forex occurs when the price and the indicator fail to simultaneously make higher highs or lower lows, i.e. they are “diverging” one from another.

The following example shows a bullish divergence on the EURCAD daily chart. While the price made consecutive lower lows, the indicator didn’t follow the price and, instead, made higher highs. The indicator and price “diverged” one from another. As a result, the price changed its previous downtrend to start a new uptrend.

Summary

The stochastic indicator is widely used in the Forex community. It consists of two lines: the indicator line %K, and the signal or trigger line %D. The stochastic indicator can be used to identify oversold and overbought conditions, as well as to spot divergences between the price and the indicator.

A reading above 80 is usually considered as overbought, while a reading below 20 is considered oversold. However, the price can remain in overbought and oversold conditions for a long period of time, especially during strong up- and downtrends.

A divergence occurs when the price “diverges” from the indicator, i.e. the price makes lower lows while the indicator makes higher lows, or the price makes higher highs while the indicator makes lower highs.

As with any momentum indicator, traders should wait for additional confirmation signals to enter a trade, as these types of indicators can occasionally give false signals.

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