What is the exponent of 1? KDJ？
2.2 calculation method. KDJ index
3. Three lines. KDJ index
4.4 Application skills. KDJ index
Advantages and disadvantages of 5.5. KDJ index
What is the exponent of 1? KDJ？ KDJ indicator is a commonly used technical analysis indicator, which was put forward by GeorgeLane in 1980 to judge the overbought and oversold situation of trading products such as stocks and futures, and the strength of the market. KDJ index is improved on the basis of stochastics (KD index). It reflects the buying and selling power and trend of the market by calculating the relationship between the highest price, the lowest price and the closing price.
2. Calculation method of KDJ index The calculation of KDJ index includes three steps:
1) Calculate the immature random value RSV(RawStochasticValue):
RSV= (closing price-lowest price)/(highest price-lowest price) * 100
2) Calculate the value of k:
K=A(RSV, n, 1), where n is the calculation period.
3) calculate d value and j value:
D=A(K，m， 1)，J=3K-2D
Where a is the simple moving average and m is the smoothing coefficient, usually 3.
3. Three lines KDJ indicator KDJ indicator consists of three lines, namely K line, D line and J line.
K-line: It reflects the market activity in recent N days. The higher the K-line, the more active the market; The lower the K-line, the colder the market.
D-line: it is the average value of K-line, which is used to reflect the market trend. When the K line is greater than the D line, the market is on the rise; When the K line is less than the D line, the market is in a downward trend.
J-line: It is the weighted moving average of K-line and D-line, which is used to judge the overbought and oversold situation in the market. When the J line is greater than 100, the market is overbought; When the J line is less than 0, the market is oversold.
4. Application skills of KDJ indicators KDJ indicators can be used to judge trading opportunities and confirm trends. Here are some common application skills:
1)KDJ gold fork dead fork: when the K line passes through the D line from below, a gold fork is formed, which is a buy signal; When the K line crosses the D line from above, a dead fork is formed, which is a selling signal.
2) overbought and oversold: when the J line is greater than 100, it indicates that the market is overbought and may be adjusted or reversed; When the J line is less than 0, it indicates that the market is oversold and may rebound or reverse.
3) Deviation phenomenon: When the price hits a new high but the KDJ index does not hit a new high, or the price innovation is low and the KDJ index does not hit a new low, there may be a trend reversal.
4) Combination with other indicators: KDJ indicator can be combined with other technical indicators such as moving average and MACD to enhance the analysis effect.
Advantages and disadvantages of 5.5. Advantages of KDJ indicators:
1)KDJ index is relatively simple and easy to understand and use.
2)KDJ index can better reflect the overbought and oversold situation and trend of the market.
Disadvantages:
1)KDJ indicator is sensitive to short-term fluctuations and may produce more error signals.
2)KDJ indicators are prone to generate chaotic signals when the market is sideways.
3)KDJ index has limited ability to predict extreme market (such as skyrocketing and plunging).
Through the above introduction, we have a more comprehensive understanding of kdj indicators. When using kdj indicators, it is necessary to analyze and judge the specific trading varieties and market conditions to avoid blindly following the indicator signals. At the same time, it is suggested that when using technical indicators, we should also combine fundamental analysis and other indicators to make comprehensive judgments to improve the trading effect.