Stochastic Oscillator (Stoch) - Built-in Indicator Guide

Computes smoothed stochastic oscillator lines %K and %D from price data using Stoch and Sma algorithms.

Overview

The Stochastic Oscillator measures the relative position of the close price within the high-low range over a specified lookback period. It is commonly used to identify potential overbought or oversold conditions in a market. The indicator produces two smoothed lines: a fast line (%K) and a slower line (%D), which help traders gauge momentum and possible reversals.

On the chart, the %K line is drawn in blue and the %D line in red. A background band from 20 to 80 (aqua fill with gray border) highlights the typical oscillation range, and a gray horizontal line at 50 marks the midpoint. The band and level are purely visual references and do not affect the computation.

How it works

1. User configures k_length, k_smoothing, and d_smoothing via the indicator settings.
2. For each bar, the Stoch algorithm computes a raw oscillator value using close, low, high, and the lookback length k_length.
3. The raw value is smoothed with a simple moving average of length k_smoothing to produce the %K line.
4. The %K series is smoothed again with a simple moving average of length d_smoothing to produce the %D line.
5. The current %K and %D values are returned and plotted as blue and red lines respectively.
6. The background band (20–80) and middle level (50) are drawn as reference.

Parameters

Code walkthrough

Decorators and Parameters

Lines 6-13 of Stochastic Oscillator.indie5:

@indicator('Stoch', format=format.PRICE)  # Stochastic
@param.int('k_length', default=14, min=1, title='Fast K stochastic length')
@param.int('k_smoothing', default=1, min=1, title='Fast K stochastic smoothing')
@param.int('d_smoothing', default=3, min=1, title='Slow D stochastic smoothing')
@band(20, 80, fill_color=color.AQUA(0.1), line_color=color.GRAY, title='Background')
@level(50, line_color=color.GRAY(0.5), title='Middle Band')
@plot.line(color=color.BLUE, title='%K')
@plot.line(color=color.RED, title='%D')

The @indicator decorator sets the display name to ‘Stoch’ and the format to PRICE. @param.int decorators define three user-configurable integer parameters with defaults and titles. @band, @level, and @plot.line decorators specify the visual elements: a background band between 20 and 80, a middle line at 50, and two plot lines for %K (blue) and %D (red).

Computing %K

Lines 14-15 of Stochastic Oscillator.indie5:

def Main(self, k_length, k_smoothing, d_smoothing):
    k = Sma.new(Stoch.new(self.close, self.low, self.high, k_length), k_smoothing)

The Main function receives the parameters. It first computes a raw stochastic series using Stoch.new, which takes the current bar’s close, low, high, and the k_length lookback. This series is then smoothed with a simple moving average (Sma.new) using k_smoothing to produce the %K line.

Computing %D and Returning Values

Lines 16-17 of Stochastic Oscillator.indie5:

    d = Sma.new(k, d_smoothing)
    return k[0], d[0]

The %D line is obtained by smoothing the %K series with another simple moving average of length d_smoothing. This makes %D a slower, more smoothed version of %K. The function returns the current values k[0] and d[0] for the two plot lines.

Reading the chart

• The blue line (%K) represents the fast stochastic oscillator value.
• The red line (%D) represents the slow stochastic oscillator value, smoothed from %K.
• The background band (20 to 80) highlights the typical range; values above 80 may indicate overbought, below 20 oversold.
• The middle line at 50 serves as a reference center.
• When %K crosses above %D, it may signal upward momentum; when below, downward.

Implementation notes

• The Stoch algorithm uses close, low, high, and a lookback length; its internal calculation is not exposed in this code.
• Smoothing is performed using simple moving averages (Sma), which average the last N values.
• The indicator returns only the current bar’s values via [0]; previous values are used for smoothing internally.
• Parameters k_smoothing and d_smoothing must be at least 1.

FAQ

How do I adjust the sensitivity of the stochastic oscillator?

Increase k_length to consider more bars for the raw stochastic, or increase k_smoothing to smooth %K more. d_smoothing controls the smoothness of %D relative to %K.

What do the %K and %D lines represent?

%K is the fast stochastic line computed from price data; %D is a further smoothed version of %K, acting as a slower moving average.

Can I change the colors of the lines?

Yes, modify the color parameters in the @plot.line decorators for %K and %D.

Full source code

Indie Script v5, the built-in indicator as shipped with TakeProfit. Add it from the indicators menu or copy the code into the platform’s script editor.

# indie:lang_version = 5
from indie import indicator, format, param, band, color, level, plot
from indie.algorithms import Sma, Stoch


@indicator('Stoch', format=format.PRICE)  # Stochastic
@param.int('k_length', default=14, min=1, title='Fast K stochastic length')
@param.int('k_smoothing', default=1, min=1, title='Fast K stochastic smoothing')
@param.int('d_smoothing', default=3, min=1, title='Slow D stochastic smoothing')
@band(20, 80, fill_color=color.AQUA(0.1), line_color=color.GRAY, title='Background')
@level(50, line_color=color.GRAY(0.5), title='Middle Band')
@plot.line(color=color.BLUE, title='%K')
@plot.line(color=color.RED, title='%D')
def Main(self, k_length, k_smoothing, d_smoothing):
    k = Sma.new(Stoch.new(self.close, self.low, self.high, k_length), k_smoothing)
    d = Sma.new(k, d_smoothing)
    return k[0], d[0]