Chart Stochastic Oscillator

Telemet Orion users may easily add a Stochastic oscillator to Charts through the Lower Indicators menu within Options.  Simply select Stochastic from the drop down menu.  You may customize the Smoothing, Period and other characteristics.  For example, Simple, Weighted, and Exponential MA are all available choices for Smoothing.

Developed by George C. Lane, this is a price velocity oscillator which identifies overbought and oversold conditions by relating closing prices to the security’s trading range during a specific period. The indicator curve, or %K, is smoothed and plotted against a slower, second smoothing of the indicator called the "trigger line," or %D. The %K and %D curves oscillate between zero and 100, indicating the security is trading at the lowest or highest area of its trading range, respectively. Buy and sell signals are given when the faster %K crosses the slower %D or when either curve extends above or below specific threshold levels.

Interpretation: Buy (sell) when both curves extend below (above) a specific threshold (usually 20 for buy signals and 80 for sell signals).  Buy (sell) when %K crosses above (below) %D.  Look for divergence between price and %D to signal trend reversals.