StockFetcher Forums · Filter Exchange · True Range Stochastics Indicator (Or: Stochastics using True High/Low)<< >>Post Follow-up
vict0rchan
5 posts
msg #151068
Ignore vict0rchan
modified
3/4/2020 7:00:11 AM

Stochastics is a useful indicator to see where the current close is in relation to the recent range, however, it breaks down when there is a large gap up or down.

Take this example:
Day 1: High 22, Low 21, Close 21
Day 2: High 16, Low 15
Day 3: High 17, Low 16
Day 4: High 17, Low 15, Close 17

3-day Stochastics at Day 4
= [(Close minus 3-Day Low) / 3-Day Range] x 100
= [(17 - 15) / (17 - 15)] x 100
= 100

While it is true that Day 4 closes at the "3-day high" it completely ignores that Day 2 gaps down heavily from Day 1.

If you take the "true high" of Day 2 as the close of Day 1:

True 3-day Stochastics at Day 4
= [(17 - 15) / (21 - 15)] x 100
= 33

It reflects more truly about what is really going on in the market. (For those who is familiar with the Average True Range, it is the same concept here.)

Fetcher[set{TrueHigh4, max(Close 5 days ago, High 4 days high)}
set{TrueLow4, min(Close 5 days ago, Low 4 days low)}
set{TrueRange4, TrueHigh4 - TrueLow4}
set{TruePos4, Close - TrueLow4}
set{TrueRatio, TruePos4/TrueRange4}
set{True%R_4, TrueRatio * 100}
Draw True%R_4
]



StockFetcher Forums · Filter Exchange · True Range Stochastics Indicator (Or: Stochastics using True High/Low)<< >>Post Follow-up

*** Disclaimer *** StockFetcher.com does not endorse or suggest any of the securities which are returned in any of the searches or filters. They are provided purely for informational and research purposes. StockFetcher.com does not recommend particular securities. StockFetcher.com, Vestyl Software, L.L.C. and involved content providers shall not be liable for any errors or delays in the content, or for any actions taken based on the content.


Copyright 2018 - Vestyl Software L.L.C.Terms of Service | License | Questions or comments? Contact Us
EOD Data sources: DDFPlus & CSI Data Quotes delayed during active market hours. Delay times are at least 15 mins for NASDAQ, 20 mins for NYSE and Amex. Delayed intraday data provided by DDFPlus