Fast Stockastics Financial GlossaryWhat is it? The theory behind stockastics is that as an upward trend begins to tire, closing prices will fall towards the bottom of the recent range of intra day prices whereas they will have been towards the top of the range when the trend was in full flow. Stockastics is used to indicate an overbought/oversold market. Fast Stochastics consists of two lines, %K and %D The %K line measures, as a percentage, where the current close is, in relation to the lowest low over the observation period (in this case 14 days). This is shown on a scale of 0 to 100, where 0 is the observation period low, and 100 is the observation period high. The %D line is a Simple Moving Average of the %K.Trading signals are generated by the crossover of these two lines.
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