Introduction
Encounter the Know Sure Thing (KST), the brainchild of Martin Pring. Designed as a momentum oscillator, KST translates the esoteric whispers of rate-of-change data into shout-outs loud enough for traders to hear and act upon. If you’re tiptoeing into the technical analysis garden, KST might just be the flashlight you need on a dark, twisty path!
Calculating the Know Sure Thing (KST)
The calculation behind the KST sounds like a secret sauce recipe, but fear not, it’s simpler than your last attempt at tax returns! Here it goes:
KST = (RCMA #1 × 1) + (RCMA #2 × 2) + (RCMA #3 × 3) + (RCMA #4 × 4)
Those mysterious RCMAs? They’re just weighted averages of the rate-of-change (ROC) over different periods:
- RCMA #1 = 10-period SMA of 10-period ROC
- RCMA #2 = 10-period SMA of 15-period ROC
- RCMA #3 = 10-period SMA of 20-period ROC
- RCMA #4 = 15-period SMA of 30-period ROC
Top it all off with a 9-period SMA of the KST to get your signal line. Voilà! You’ve concocted the KST brew.
Trading with the Know Sure Thing
Understanding the KST isn’t just about the math; it’s about reading the mood of the market. The KST dances around a signal line, and traders watch this ballet to spot crossover events. A crossover? It’s the gossip you want to listen to — indicating buy or sell signals.
However, KST isn’t just a lone ranger. It works best with a buddy system — combining forces with other technical tools. Throw in some chart patterns or other indicators to get a clearer picture of when to make your trading move.
Real World Application
Imagine watching a KST graph. It’s not unlike watching a suspense thriller — tension builds as the line approaches the signal line. Will it cross? Will it not? And when it does, it might just be the right time to make your move, like jumping in at the climax of the movie!
Related Terms
- Momentum Oscillator: A tool that helps measure the speed or velocity of price changes in a financial instrument.
- Rate of Change (ROC): This indicator measures the percentage change in price between the current price and the price a certain number of periods ago.
- Simple Moving Average (SMA): An arithmetic moving average calculated by adding recent prices and then dividing that by the number of time periods in the calculation average.
Recommended Reading
- “Technical Analysis Explained” by Martin Pring - Where the KST was born, a must-read to get insights from the creator himself.
- “Trading for a Living” by Dr. Alexander Elder - Enhance your understanding of trading with a holistic approach to technical analysis.
Embrace the oscillation sensations with the Know Sure Thing. Who knows? It might just add that extra swing to your trading steps!
