Stochastic Oscillator Explained
An oscillator from 0 to 100 that shows where today's close sits within the high–low range of the last 14 sessions. Popularised by George Lane in the 1950s.
How it's calculated
Raw %K = 100 × (close − lowest low) / (highest high − lowest low), over 14 sessions. This game uses the “slow” version: %K is a 3-session average of that value, and %D is a 3-session average of %K.
How traders use it
Above 80 is read as overbought and below 20 as oversold. Crosses of %K over %D are used as signals, especially when they happen in those extreme zones.
What people say
Lane's idea was that in an uptrend closes tend to cluster near the top of the range. Like RSI, it can stay in the extreme zones during strong trends, so many traders only take signals in the direction of the main trend.
Practise with this indicator
Open a real hidden-stock chart with only this indicator turned on and see if it helps you beat the market.
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