Over the years numerous technical indicators have been developed to describe the stock performance, or, hopefully to predict future price movements. In this section we introduce five of the most useful indicators, provide examples, and explain how they are calculated.

Stochastics

Figure 7. K/D

KD stands for two Stochastic indicators K and D. In order to compute the p-period K, one needs to compute the p-period high Hp and low Lp,

then the fast Stochastic K is given by

The q-period slow Stochastic D is simply the q-period moving average of K. Many people simply refer to D by calling it KD.

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