Know Sure Thing (KST)
Contents
Unraveling the Mystery of Know Sure Thing (KST) Indicator
Decoding Know Sure Thing (KST) Indicator
The Know Sure Thing (KST) is a momentum oscillator devised by Martin Pring to simplify the interpretation of rate-of-change price data for traders.
Key Takeaways
- KST serves as a momentum oscillator aimed at interpreting rate-of-change price data.
- Trading signals are triggered by KST crossing over the signal line, with attention to overbought or oversold conditions.
- Traders often combine KST with other technical analysis tools for enhanced trade decisions.
Calculating the Know Sure Thing (KST)
The KST is computed by averaging four different rate-of-change (ROC) periods and deriving a signal line from a 9-period simple moving average (SMA) of the KST value.
text{KST} = (text{RCMA #1} times 1) + (text{RCMA #2} times 2) + (text{RCMA #3} times 3) + (text{RCMA #4} times 4)
Understanding the Know Sure Thing (KST)
Similar to other momentum oscillators like the relative strength index (RSI), KST generates trading signals upon crossing the signal line. Traders also consider convergence/divergence, overbought/oversold conditions, and center line crossovers.
In a 1992 article in Stocks and Commodities, Pring originally termed the indicator "Summed Rate of Change (KST)," but it became commonly known as KST among technical analysts.
Example of Know Sure Thing (KST)
An illustration depicts the KST indicator on a chart, showcasing instances of overbought conditions and signal line crossovers. Traders often employ additional technical analysis tools and insights to validate KST signals and enhance trade decisions.