What is the Stochastic Oscillator? ... The Stochastic Oscillator is an indicator that compares the most recent closing price of a securityPublic SecuritiesPublic ...StochasticOscillatorAnindicatorthatcomparesthelocationofasecurity’sclosingpricecomparedtothehighandlowpricerangeduringaspecifiedperiodHome›Resources›Knowledge›Trading&Investing›StochasticOscillatorWhatistheStochasticOscillator?TheStochasticOscillatorisanindicatorthatcomparesthemostrecentclosingpriceofasecurityPublicSecuritiesPublicsecurities,ormarketablesecurities,areinvestmentsthatareopenlyoreasilytradedinamarket.Thesecuritiesareeitherequityordebt-based.tothehighestandlowestpricesduringaspecifiedperiodoftime.Itgivesreadingsthatmove(oscillate)betweenzeroand100toprovideanindicationofthesecurity’smomentum.  Thestochasticreadingsareessentiallypercentageexpressionsofasecurity’stradingrangeoveragiventimeperiod.(ThedefaultsettingfortheStochasticOscillatoris14timeperiods–hourly,daily,etc.)Areadingof0representsthelowestpointofthetradingrange.Areadingof100indicatesthehighestpointduringthedesignatedtimeperiod. StochasticOscillatorFormulaTheformulaforcalculatingtheStochasticOscillatorisasfollows:%k=(LastClosingPrice–LowestPrice)/(HighestPrice–LowestPrice)x100%D=3-daySMAof%K Where:CisthelastclosingpriceLowestLowisthelowestlowforthetimeperiodHighestHighisthehighesthighforthetimeperiod OscillatorHistoryDr.GeorgeLanedevelopedtheStochasticOscillatorinthelate1950sforuseintechnicalanalysisofsecurities.Lane,afinancialanalyst,wasoneofthefirstresearcherstopublishresearchpapersontheuseofstochastics.HebelievedtheindicatorcouldbeprofitablyusedinconjunctionwithFibonacciretracementFibonacciNumbersFibonacciNumbersarethenumbersfoundinanintegersequencediscovered/createdbymathematician,LeonardoFibonacci.ThesequenceisaseriesofnumberscyclesorwithElliotWavetheory.LanenotedthattheStochasticOscillatorindicatesthemomentumofasecurity’spricemovement.Itisnotatrendindicatorforpriceas,forexample,amovingaverageindicatoris.Theoscillatorcomparesth