A.I.M. Users Bulletin Board

[ls7550]

Try this link instead Conrad

http://en.wikipedia.org/wiki/Stochastic_oscillator

A conventional stochastic oscillator measures the current distance between a top and bottom value.

Stock prices are however logarithmic for example when dividend yields are 0.2% and double up to 0.4% likely the stock prices will halve. In a similar manner to how stock prices would halve if the yield rose from 2% to 4%

Its more appropriate therefore to not use

( current - bottom ) / ( top - bottom )

for a stochastic oscillator against stocks, but instead use a log version of that.

Best. Clive.