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%K fast, %D slow - there quite a few settings to use in stochastic formulas. My question is this, "What is an optimum n-periods (number of periods) setting to use for day trading, and for intraday trading"? (05, 03, 03) is one short setting used and (21, 09, 09) is a longer setting.

 

Why, a larger number is used for %K fast and a small number is used for %D slow. A divergence setting is opposite this and even the n-periods setting changes depending on the length of the trade.

 

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stochastic is a technical momentum indicator that compares a closing price to its price range over a given time period. The oscillator's sensitivity to market movements can be reduced by adjusting the time period or by taking a moving average of the result. This indicator is calculated with the following formula:

%K = 100[(C - L14)/(H14 - L14)]
C = the most recent closing price 
L14 = the low of the 14 previous trading sessions
H14 = the highest price traded during the same 14-day period.

%D = 3-period moving average of %K

 

The theory behind this indicator is that in an upward-trending market, prices tend to close near their high, and during a downward-trending market, prices tend to close near their low. Transaction signals occur when the %K crosses through a three-period moving average called the "%D".

 

 

you can also change the settings to reflect not only a change or over bought and over sold conditions but to recognize areas of support and resistance for range trading by adjusting your %k fast 14 %k slow 3 %d 3

 

Adam, thanks for you reply, I'll be studying it until I can reach you again. PJ

Adam, why a short number of periods, in your case 3 bars and in my case 9 bars (the very last setting of (%K, %D, N) (21, 9, 9 or 14, 3, 3) can indicate the probability of the next immediate high-low bar in a given range set doesn't seem to be an optimum number of periods. I trade on www.forex.com and usually use a weekly-daily-hourly chart tracked in Excel when feasible. I intend to start on FXDD eventually.

I follow the daily high-low strategy which can be found in Mr. James Dicks Forex Secrets Revealed. Right now I'm working on the optimum number of periods while paper trading until my start-up funds are more in par.

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