10.7

[milanese]

Based on:
http://www.investopedia.com/terms/s/sto ... llator.asp

%K = 100[(C - L)/(H - L)]

C = the most recent closing price
L = the low of the N previous trading sessions
H = the highest price traded during the same N-day period.

%D = 1-period moving average of %K

For the stoch we use, it is based on Close/Close instead of High/Low.

Therefore:
L = the lowest close of N periods
H = highest close of N periods

For Sto 2,1,1
L = lowest close of 2 period (current close vs previous close)
H= highest close of 2 period (current close vs previous close)
C = Current close

When price less than previous close,
L = C , Current close
H = Previous close

K=100( C-L)/ (H-L) = 100(C-C)/(H-L) = 0

When price greater than previous close,
L = previous close
H = C, Current Close

K =100(C-L)/ (H-L) = 100(C-L)/(C-L) = 100

This is the understand that we have...might be wrong.

Cheers

absolutely correct. Thanks for your explain, I think it is a big help for all to better understand the 2,1,1 stoch.

Cheers

Tommaso

[mobthehop]

ok so far....

but we are talking about an MTF indicator and this is where I would appreciate some further explanation.

As an example we are on any D1 chart and are thus looking at the weekly and monthly TF... What is really the present close - is it the present price on the D1 chart?

If this should be the case - another way of looking at it would be a High/Low breakout based on weekly / monthly preceding 2 periods?

Cheers / Mop

[milanese]

ok so far....

but we are talking about an MTF indicator and this is where I would appreciate some further explanation.

As an example we are on any D1 chart and are thus looking at the weekly and monthly TF... What is really the present close - is it the present price on the D1 chart?

If this should be the case - another way of looking at it would be a High/Low breakout based on weekly / monthly preceding 2 periods?

Cheers / Mop

No it is the price on the monthly chart, indipendend which time frame you are using. That is why the entire line for a month changes.. at exp if we have the 10th it will change for ten previous D1 bars ecc.

Cheers

Tommaso

[harry]

Hey There,

Can anyone help me to understand line of zero plz? what is the use of it?

thanks
Harry

[nanningbob]

The problem with everything right now is prices are just flat and have been most of the year. So price doesnt have to move much to make an indi move. Then it is usually a news story that does. I mean trying to find something that moves over 50 pips in a day right now is kind of tough. With these narrow bands of price movement the difference between the high and the low is peanuts so if something moves 20-30 pips it will move even the monthly line. Just the way it is right now. Just look at the picture you posted and the difference between the highest high and lowest low..

[nanningbob]

Hey There,

Can anyone help me to understand line of zero plz? what is the use of it?

thanks
Harry

Its the break even line when you have a trade or multiple trades going.

[mobthehop]

T,

thanks but not what I meant.... And I made a mistake as we need to look at close / close not high /low. So....

Example: I can draw highest / lowest close of preceding 2 candles on W1 TF - if I understood SpiderX explanation correctly, the Stochs indicator will flip to 100 if the price exceeds the highest close of those two candles and to zero below the lowest close - see attached screenshot - is that correct...?

Image .... WK1 draw the two lines / ....D1 shows lines and indicator on D1


Thanks for helping here - I really dont want to annoy anybody, just understand how this works...

[milanese]

T,

thanks but not what I meant.... And I made a mistake as we need to look at close / close not high /low. So....

Example: I can draw highest / lowest close of preceding 2 candles on W1 TF - if I understood SpiderX explanation correctly, the Stochs indicator will flip to 100 if the price exceeds the highest close of those two candles and to zero below the lowest close - see attached screenshot - is that correct...?

Image .... WK1 draw the two lines / ....D1 shows lines and indicator on D1


Thanks for helping here - I really dont want to annoy anybody, just understand how this works...

it will be 100 if price > last close and 0 if price < last close, 3 1 1 would do what you described

Cheers

Tommaso

[mobthehop]

T, appreciated.... really.... all clear now / Mop

[mobthehop]

NB,

could you please advise one this:

You mentioned earlier that “Once price direction is set for the month it lets you know” could you explain a bit more how the settlement of price direction can be perceived / measured?

Thanks in advance / Mop