AGAIG Stochastics Label

[csricksdds]

As an individual who does not like lower indicators, or charts with too much activity, I like my BestTradingChartSetup with some easily visible upper labels indicating possible changes taking place. Merry Day lists Stochastics as number five on her list of indicators and so I have put together the following STOCHASTIC LABEL to let me know Overbought/Oversold conditions.

The code follows:

#Thanks to RG (?) for basic indicator outline
#Revamped by C. Ricks to show as upper label only
#Note: Label will show Yellow in mid zone and say "Stochastic" - Then Label will turn RED if Stochastic Overbought and Green if Stochastic Oversold

input KPeriod = 14;
input DPeriod = 3;
input price = close;

def lowestLow = Lowest(low, KPeriod);
def highestHigh = Highest(high, KPeriod);
def FastK = if highestHigh != lowestLow then (close - lowestLow) / (highestHigh - lowestLow) * 100 else 0;

def SlowK = Average(FastK, DPeriod);
def SlowD = Average(SlowK, DPeriod);

def overbought = SlowK > 80;
def oversold = SlowK < 20;

AddLabel(yes, "Stochastics" + "" +
if overbought then " (Over Bought) " else if oversold then " (Over Sold) " else "",
if overbought then Color.RED else if oversold then Color.GREEN else Color.Yellow);

#End Code

 

[csricksdds]

FYI:
1. Keep in mind that most oscillators are collinear, meaning most measure the same thing.
So the list only shows that some oscillators have a SLIGHT edge over others.

2. Oscillators have issues, as seen here:
https://usethinkscript.com/threads/how-to-read-an-oscillator-in-thinkorswim.11497/
Oscillators have value when used CORRECTLY!
The oscillators on the list were tested with detailed specifications to maximize profitability.

For example, the Stochastics oscillator on the list was refined by volume and a moving average to use as a signal line.

3. The list was found to be the best of the best oscillators when tested on a DAILY chart.
Oscillators look for the cyclical pattern of price movements, which are measured best on higher timeframes.
The use of oscillators on lower timeframes can result in false signals and whipsaws, as the overall trend can be difficult to identify on these smaller aggregations.

Hope this helps.

Feedback is always helpful - I always use multiples for any trades made.

 

[MerryDay]

As an individual who does not like lower indicators, or charts with too much activity, I like my BestTradingChartSetup with some easily visible upper labels indicating possible changes taking place. Merry Day lists Stochastics as number five on her list of indicators and so I have put together the following STOCHASTIC LABEL to let me know Overbought/Oversold conditions.

The code follows:

#Thanks to RG (?) for basic indicator outline
#Revamped by C. Ricks to show as upper label only
#Note: Label will show Yellow in mid zone and say "Stochastic" - Then Label will turn RED if Stochastic Overbought and Green if Stochastic Oversold

input KPeriod = 14;
input DPeriod = 3;
input price = close;

def lowestLow = Lowest(low, KPeriod);
def highestHigh = Highest(high, KPeriod);
def FastK = if highestHigh != lowestLow then (close - lowestLow) / (highestHigh - lowestLow) * 100 else 0;

def SlowK = Average(FastK, DPeriod);
def SlowD = Average(SlowK, DPeriod);

def overbought = SlowK > 80;
def oversold = SlowK < 20;

AddLabel(yes, "Stochastics" + "" +
if overbought then " (Over Bought) " else if oversold then " (Over Sold) " else "",
if overbought then Color.RED else if oversold then Color.GREEN else Color.Yellow);

#End Code

FYI:
1. Keep in mind that most oscillators are collinear, meaning most measure the same thing.
So the list only shows that some oscillators have a SLIGHT edge over others.

2. Oscillators have issues, as seen here:
https://usethinkscript.com/threads/how-to-read-an-oscillator-in-thinkorswim.11497/
Oscillators have value when used CORRECTLY!
The oscillators on the list were tested with detailed specifications to maximize profitability.

So, it is very important to click on the link below the list, to see how to modify the oscillator to use it correctly!

If you click on the link, you will see that you are not utilizing the Stochastic indicator properly.
For the Stochastic to be profitable, it used a 20-day lookback and was refined by volume and have an added moving average to use as a signal line.

3. The list found that these oscillators were profitable when tested on a DAILY chart.
Oscillators look for the cyclical pattern of price movements, which are measured best on higher timeframes.
The use of oscillators on lower timeframes can result in false signals and whipsaws, as the overall trend can be difficult to identify on these smaller aggregations.

Hope this helps.