Stochastic: Buy and Sell Lines

Rule #1 Reminder: On the Stochastic, which line is the buy line and which is the sell?

Originally published on 5/9/06 and filed under The Three Tools.

Barry in Chicago is one of many to ask the following question about how to read Stochastic:

Question:

Phil Town,

I have purchased the book and read it cover to cover. VERY GOOD!!!

I am having trouble with the Stochastic chart on MSN. Which line is the buy line and which is the sell? Is the buy line the 14-Period %K?

Any help would be greatly appreciated.

Thanks,

Barry

Answer:

The "buy line" for the Stochastic is the 14-Period %K line -- and it's usually black. 

The other line, the 5-Period %K line, is red and is the sell line.  When black goes above red, buy.  When red goes above black, sell. 

(Of course we don't use just one Tool, but that's how we'd read this one.)

Now go play!

Phil Town