Description
The Stochastic Oscillator was developed by George Lane and is a banded oscillator used to determine the overbought or oversold status of an equity. The oscillator ranges from 0 to +100. Values of the stochastic above 80 are generally considered overbought, while values below 20 are considered oversold. The stochastic is usually divided into two different stochastics known as the "fast" stochastic and the "slow" stochastic. The slow version is slightly less responsive than the fast, but usually provides clearer signals. There are generally two linse to a stochastic, the %K line and the %D line. In the Fast Stochastic the %K line is the raw calculated value of the stochastic and the %D line is a trailing SMA signal line. For the Slow Stochastic, the %K line is the %D line of the Fast Stochastic and the %D line of the Slow Stochastic is a trailing SMA of the Slow %K. EAS does not segregate the fast and the slow lines - it plots them all. The Fast %K line is plotted as a "silver" (light gray) line, the Fast %D (which is the Slow %K) is plotted as a "red" line and the Slow %D is plotted as a "blue" line.

Other ways to play the Stochastic is to look for trends breaks within the Stochastic lines themselves, look for divergences between the Stochastics and the calculation variable or play crossovers of the %K and %D lines. Indicators that use similar concepts to Stochastic are fwpr and frsi.

The View title displays the name of the indicator and the values for the Slow %K, Slow %D and Fast %K Stochastic values. It also displays the lookback periods used for the %K to %D smoothing constant and the Stochastic calculation. The Titlebar Chart Code for this indicator is stoch (see EAS Titlebar Chart Codes)

Inputs

p1

is the lookback period for the Fast Stochastic calculation. p0 defines the smoothing period for determination of the Slow %K (or Fast %D) and Slow %D.

Output Data & Plotting
If returnflag is set to "data" a (b-a+1)-row by 3-column matrix of data will be returned. The output is only valid for data points beyond the lookback period, p1+p0, in time. The first column of output data contains the Slow Stochastic %K data. The second column contains the Slow Stochastic %D data and the third column contains the Fast Stochastic %K data.

Background Reading
Further information regarding this indicator can be found in the following resources:

StockCharts.com Stochastic Oscillator

Clearstation.com Oscillating

Equis.com Stochastic Oscillator