StockFetcher Forums · Filter Exchange · True Range Stochastics Indicator (Or: Stochastics using True High/Low) << >>Post Follow-up
 vict0rchan5 postsmsg #151068- Ignore vict0rchanmodified 3/4/2020 7:00:11 AMStochastics 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

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