What is the 'Stochastic Oscillator'
The Stochastic oscillator is a technical momentum indicator that compares a security's 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 14day period.
%D = 3period moving average of %K
BREAKING DOWN 'Stochastic Oscillator'
The theory behind this indicator is that in an upwardtrending market, prices tend to close near their high, and during a downwardtrending market, prices tend to close near their low. Transaction signals occur when the %K crosses through a threeperiod moving average called the "%D".

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