KDJ
Current parameter: KDJ(9,3,3)
Indicator Features
• The KDJ indicator has excellent sensitivity. When the price trend changes slightly, the KDJ indicator can always give a trading instruction signal at the first time
• The KDJ indicator has an early warning function. When the price enters a strong rising or falling market, the three curves in the KDJ indicator will enter the ultra-low or ultra-high area in turn. The higher or lower the value, the greater the possibility of reversal
• KDJ indicators are highly compatible with other technical indicators
What is KDJ
KDJ, also known as the stochastic indicator, was first used in the analysis of the futures market, pioneered by George Lane (George Lane), and is now widely used in the short-term trend analysis of the stock market. Stochastic indicator (KDJ) is calculated based on the highest price, lowest price and closing price, and the K value, D value and J value obtained form a point on the coordinates of the indicator, connecting countless such points , forming a complete KDJ indicator that can reflect the price fluctuation trend.
Algorithm
KDJ is to obtain the immature random value (RSV) by calculating the proportional relationship between the highest price, the lowest price and the closing price in a specific period, and then calculate the K value, D value and J value according to the method of smoothing the moving average , and graphed to study price movements. The specific calculation method is as follows.
First, calculate the RSV value for a certain period, and then calculate the K value, D value and J value. KDJ can describe the characteristics of short-term and medium-term market fluctuations by setting different periods of time. Taking the calculation of daily KDJ value as an example, the calculation formula is:
n-day RSV = (Cn-Ln) ÷ (Hn-Ln) × 100.
In this formula, Cn is the closing price of the nth day; Ln is the lowest price within n days; Hn is the highest price within n days. RSV values always fluctuate between 1 and 100.
Then calculate K value and D value, J value, its calculation formula is:
K value of the current day = 2/3 × K value of the previous day + 1/3 × RSV of the current day
D value of the current day = 2/3 × D value of the previous day + 1/3 × K value of the current day
J value of the day=3×K value of the day-2×D value of the day
If there is no K value and D value in the previous day, you can use 50 instead.
Usage of KDJ
Golden fork
When the K line breaks through the D line on the graph, commonly known as the golden cross, it is a buying signal. In addition, when the K line and the D line cross upwards below 20, the short-term buying signal at this time is more accurate; if the K value is below 50, cross the D value twice to form a higher golden cross "W" If there is no form, the stock price may have a considerable rise, and the market prospect is promising.
Dead fork
When the K value is getting smaller and smaller, and then falls below the D line from above, it is usually called a dead cross, and it is regarded as a sell signal. In addition, when the K line and the D line cross down at the 80 mark, the short-term sell signal at this time is more accurate. If the K value is above 50, crosses below the D line twice in the trend, and dies from the low "M" shape, the market prospect may have a considerable stock price drop.
Overbought
The value of KDJ ranges from 0 to 100 (the J value sometimes exceeds), the K value is above 80, the D value is above 70, and when the J value is greater than 90, it is overbought. Under normal circumstances, the stock price may fall. Investors should act cautiously, outsiders should not chase the rise, and insiders should sell in due course.
Oversold
The value of KDJ ranges from 0 to 100 (J value sometimes exceeds), K value below 20, D value below 30 is the oversold zone. Under normal circumstances, the stock price is likely to rise, and the possibility of a rebound increases. Insiders should not throw it out easily, and outsiders can find opportunities to enter the market.
KDJ trading opportunity
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