Stochastic

Source

https://github.com/quadcode-tech/quadcodescript-library/blob/master/momentum/stochastic.lua

Syntax Format

stochastic(series, period)

Overview

The Stochastic Oscillator is an indicator in the Momentum group, which can help you get information on potential trend reversal as well as show the overbought and oversold states of an asset. Even though this indicator was created back in the 1950s, it is still considered one of the most popular oscillators because of its simplicity and efficiency.

Parameters

Parameter	Type	Purpose
series	series	Input series, taken into calculation
period	integer	Period, taken into calculation

Returns: series.

Example

instrument { name = "Stochastic" }

input_group {
    "%K Line",
    k_period = input (14, "period", input.integer, 1),
    smooth = input (3, "smoothing", input.integer, 1),

    source = input (1, "source", input.string_selection, inputs.titles),

    k_color  = input { default = "#56CEFF", type = input.color },
    k_width  = input { default = 1, type = input.line_width}
}

input_group {
    "%D Line",
    d_period = input (3, "period", input.integer, 1),

    d_color  = input { default = "#FF7700", type = input.color },
    d_width  = input { default = 1, type = input.line_width}
}

input_group {
    "Support Lines",
    overbought = input (80, "overbought", input.double, 1, 100, 1, false),
    oversold = input (20, "oversold", input.double, 1, 100, 1, false),

    overbought_color  = input { default = rgba(37,225,84,0.50), type = input.color },
    oversold_color  = input { default = rgba(255,108,88,0.50), type = input.color },
    bg_color  = input { default = rgba(255,255,255,0.05), type = input.color },

    support_width  = input { default = 1, type = input.line_width}
}

local sourceSeries = inputs [source]

k = sma (stochastic (sourceSeries, k_period), smooth) * 100
d = sma (k, d_period)

fill_area (overbought, oversold, "", bg_color)

hline { value = overbought, color = overbought_color, width = support_width, style = style.dash_line }
hline { value = oversold, color = oversold_color, width = support_width, style = style.dash_line }

plot (k, "%K Line", k_color, k_width)
plot (d, "%D Line", d_color, d_width)

hline { value = 90, color = rgba(255,255,255,0), show_label = false }
hline { value = 10, color = rgba(255,255,255,0), show_label = false }

Formula

The formula for calculating Stochastic is:

The formula represents the calculation of the indicator's %K line, which considers the closing price value to the previous highest and lowest values over the chosen period. Another element of the indicator, which is the %D line, operates as an MA to the %K line.