The Stochastic Oscillator is a momentum indicator that compares a stock’s price to its price range over a defined period of time. The oscillator ranges on a scale from 0 – 100, thus a reading of close to zero means that the stock is traded near it’s lowest price within a time period, and when it is close to 100 it is traded near it’s highest price within the time period. The calculation of the Stochastic Oscillator is done by finding the distance between the highest and lowest closing prices within a time period, and then viewing today’s price relative to this range.

Calculation:

Where:

• Closing Price(0) – today’s closing price
• Lowest Low(n) - lowest low price within the last n days
• Highest High(n) - highest high price within the last n days

To see an example of Stochastic Oscillator calculation in Excel, click here: Attach:Stochastic.xls