What is KDJ metric?

The Chinese name of the KDJ indicator is a random index, originated from the futures market.

The application rules of KDJ indicators are three curves. The application mainly involves five aspects: the absolute number of KD values, the form of KD curves, and the crossover of KD indicators; the deviation of the KD indicator; the value of the J indicator.

First, consider the KD value. The KD value ranges from 0 ~ 100, divided into several areas: 80 or above is the superbuy area, 20 or less is the supersale area, the remaining is the wandering area.

According to this division, the sale should be considered if the KD exceeds 80, and the purchase should be considered if the cost is lower than 20. It should be noted that the above division is only a preliminary process for the application of KD indicators, but only a signal. operations based on this method can easily lead to losses.

Second, consider the form of the KD indicator curve. When the KD indicator forms the header and shoulder shape and multiple top (bottom) at a relatively high or low position, it is a signal of action. Note that these forms must appear at a higher or lower position. The higher or lower the position, the more reliable the conclusion is.

Third, we should consider the crossover of KD indicators. The relationship between K and D is just like the relationship between the stock price and MA. There is also the issue of the death crossover and the gold crossover. However, the application of the crossover here is very complicated, with many other conditions attached.

Take K from bottom to top to cross with D as an example: K wearing D is a golden cross, as a buying signal. However, whether the Golden Cross should be bought depends on other conditions. The first condition is that the position of the Golden Cross should be relatively low, which is in the oversold area. The lower the price, the better.

The second condition is the number of intersections with D. Sometimes at a low position, K and D must be crossed several times. The number of intersections is at least twice. The more the number, the better.

The third condition is the position of the intersection point relative to the low point of the KD line, which is often referred to as the "intersection on the right" principle. K is the same as D when D has been raised up, which is much more reliable than D when D is falling down.

Fourth, consider the deviation of KD indicators. When KD is at a high or low position, if there is a deviation from the stock price trend, it is a signal of action.

Fifth, the value of the J indicator is greater than 100 and less than 0, both of which belong to the abnormal price zone. If the value is greater than 100, the value is overbought, and if the value is smaller than 0, the value is oversold.

Measure the test taker's knowledge about KDJ.

Emphasize the importance of technical indicators, mostly from the overall perspective of technical analysis. In practice, investors should pay attention to the use and practice of various technical analyses. With the passage of time, the technical analysis theory is complex. Each technical analysis has different perspectives and focuses, and it is indeed difficult to master. However, using these technical methods, we must understand that the theories and indicators of these technical analysis have their own weaknesses and defects. Therefore, the use of a single indicator has great blindness and limitations. The direct consequence is the failure of judgment and Investment (speculation). Therefore, for a mature professional investor, A variety of technical analysis methods should be mastered, comprehensive investigation, multi-angle thinking, and the advantages of multiple technical analysis can be used in an undefeated position.

During the analysis of KDJ, I have always stressed the sensitivity of this indicator. In fact, this sensitivity also exists in other technical indicators, but there are too many investors who use KDJ, increased its resonance. This increases the sensitivity of this indicator. In the past, people used random indicators generally through the highest price, the lowest price, and the closing price of the last day within a specific period (usually 9 days) and the proportional relationship between the three, to calculate the immature random value of the last day. However, the calculation of KDJ Based on the smoothing moving average is often random. The reliability of the J value is the worst, because it is too sensitive, followed by the K value, the D value is slightly more stable. KD comes from the William indicator, so it also has the ability of William indicator to prompt the phenomenon of overbuy and oversell. In practice, when the K-line goes through the D-line at the low position, it is called the "Golden Cross". It is a short-term rush signal. When the K-line falls down to the high position, it is also called the dead cross, it is a funding signal. In this process, the J-line often leads the KD and shows a rising and falling trend. Just like the starting gun in the hands of the referee on the sports field, the gun is not shot, and the athletes cannot get up and run, otherwise, the system will violate the rules and be punished. However, when a gun is held up, athletes must maintain a scrambling posture. For example, before KDJ started in September December 31 last year, KDJ touched the bottom of line J at an instant, and then hooked up and crossed the line D with the line k to form a "golden cross ", check William's indicator again. At this time, the two have reached the bottom, and a round of rebound is coming soon.

Practical application of KDJ indicators (I)

Among the traditional Qian Long software commonly used by brokers, there are dozens of technical indicators, making new investors at a loss. With the popularization of computers, especially the continuous innovation of stock professional software, some stock software comes with self-compiled indicator functions, which make technology indicator lovers happy to adapt and innovate. The number of popular online indicators is even more than tens of thousands. In fact, the indexes of the old stockholders cannot be lost, the variations in the expressions of different combinations of the average price and volume are rare and less practical than the classic indicators commonly used in traditional systems, of course, it still takes some time to grasp the essence of it. Zhao Yun's gun in Three Kingdoms can be used across the world, instead of the gun itself, but the user of the gun!
Any technical indicator has its own defects and limitations, such as the blind zone of MACD on the volatility trend, the blind zone of KDJ on the rolling-over single-edge passivation, and the blind zone of the pagoda line on the top and bottom, whether the pressure support of the moving average is effectively adjusted to the blind zone in place, and the replacement rate is the blind zone that cannot be identified by the suction and shipment. We can use other indicators to complement each other's shortcomings. For example, we use KDJ and CDP to compensate for the auxiliary MACD system; CCI and DMI to compensate for the KDJ system; KDJ and RSI to compensate for the moving average system; KDJ, RSI deviation to make up for the pagoda Line System; the stock price level and the K-line moving average to make up for the Blind Zone of the turnover rate, etc. Of course, sometimes one indicator cannot completely make up for the defects of another indicator, so we need to identify the problem.
Next I will share my personal opinions on common KDJ indicators based on some of my usage experience. This is for your reference only.
I. Introduction:
KDJ's full name is Stochastics, which was created by Dr. George Lane of the United States. It combines the concept of momentum, strengths and weaknesses, and the advantages of moving average, it is also a commonly used technical analysis tool in the European and American securities and futures markets. The design idea and calculation formula of random indicators all originate from William (W % R) theory, but they are more useful than W % R indicators, the W % R indicator is generally only used to determine the stock overbuy and oversell phenomena, while the random indicator integrates the moving average line idea, making the judgment on the sales signal more accurate; it is an out-of-the-box sales indicator that fluctuates between 0 and. It consists of three curves: K, D, and J. It integrates some advantages of the momentum index, strength index, and moving average line in the design, in the calculation process, we mainly study the relationship between high and low prices and closing prices, that is, by calculating the true volatility of price fluctuations, such as the highest price, lowest price, and closing price, on the current or recent days, taking into account the Random Amplitude of price fluctuations and the calculation of medium and short-term fluctuations, the short-term market test function is more accurate and effective than the moving average line, it is more sensitive than the relative strength index RSI. In short, KDJ is a concept of random fluctuation, which reflects the strength of the price trend and the trend of the band, and is very sensitive to grasping the trend of medium and short-term quotations.
Ii. calculation formula:
Taking KDJ as an example in the period of 9 days, first calculate the "immature random value", that is, the respiratory rate of the last 9 days. The formula for calculating the respiratory rate is as follows: RSVt = (Ct-L9)/(H9-L9) * 100 formula: Ct ------- the closing price of the day within the L9-------9 day of the lowest price within the H9-------9 day of the highest price from the calculation formula can be seen that the respiratory index and % R calculation is very similar. As a matter of fact, the sum of the value of the same cycle and the value of % R is equal to 100, so the value of the same cycle is between 100 and. Then, the values of K and D can be obtained. The value of K is the three-day moving average of the value of S, the formula for calculating the J-line of the three-day smooth moving average with the value of D minus the value of d by three times the value of K is as follows: kt = RSVt/3 + 2 * Kt-1/3 Dt = Kt/3 + 2 * Dt-1/3 Jt = 3 * Dt-2 * Kt KD line in the respiratory tract, the price changes with the change of medium and high prices and closing prices on the 9 th. If there is no KD value, you can replace the value of KD in the previous day with the value of the date's respiratory rate or 50. After smooth calculation, different KD values in the base period will be consistent, without any difference. The K value and K value will always be between 0 and 100. Based on the crossover principle of the fast and slow moving average, the main line breaks through the K line to buy the signal, and the main line falls below the D line to sell the signal, that is, the market is a clear upward trend, will drive the K line (fast average) with the D-line (slow average) Rising, if the rise starts to slow, it will slowly reflect to the K value and the D value, so that the K-line falls below the D-line, at this time the short-term adjustment decline established, this is a common simple application principle.

Practical application of KDJ indicators (2)

Iii. Application requirements: the random indicator responses of KDJ indicators are sensitive and fast. It is a better technical indicator for analysis and determination of short and medium-term trend bands. Generally, for those with large capital, the KDJ value in the current month is gradually absorbed when it is low. The main node usually focuses on the position of Zhou KDJ in normal operation, the results of analysis and determination of cycle high and low points in the midline band often result in frequent passivation of daily KDJ due to the single-edge mode. Daily KDJ is extremely sensitive to the change direction of the stock price, it is an important method for daily trading in and out; for short-term customers in small bands, 30 minutes and 60 minutes KDJ are important reference indicators; for investors who have designated a sales plan to place orders immediately, KDJ can provide the best inbound and outbound time in 5 minutes and 15 minutes. The default parameter used by KDJ is 9. In my personal experience, the parameter can be changed to 5 in the short-term, which not only makes the response more agile and accurate, but also reduces the passivation, common KDJ parameters include, 36, 45, and 73. Different cycles should also be comprehensively analyzed in practice, so that the short and long trends will be clear at a glance. If there is a phenomenon of different periods of resonance, it indicates that the reliability of the trend is increased. The main points of KDJ indicators are as follows:
(1) The key line is the quick confirmation line. The value above 90 is the superbuy line, and the value below 10 is the superbuy line. The D line is the slow main line. The value above 80 is the superbuy line, the value below 20 is oversold, and the j line is the direction sensitive line. When the J value is greater than 100, especially for more than five consecutive days, the stock price forms at least a short-term header. If the J value is less than 0, especially for several consecutive days or more, the stock price will at least form a short-term bottom.
(2) When the K value is gradually greater than the D value from a small value, the graph displays the D line from the bottom, and the current trend is upward. Therefore, when the K line on the graph breaks through the D line, that is, the purchased signal.
In practice, when the K and D lines cross up below 20, the short-term buy signal is more accurate at this time. If the K value is below 50, the D value is mounted two times in succession from bottom up, when the right bottom is higher than the left bottom, the stock price may increase considerably.
(3) When the K value is gradually smaller than the D value from a large value, the graph shows that the K line underpasses the D line from the top, and the current trend is downward. Therefore, when the K line breaks down the D line in the graph, that is, the sold signal.
In practice, when the K and D lines cross down at more than 80, the short-term sales signal at this time is more accurate; if the K value is over 50, from top to bottom two times below the D value, the stock price may fall sharply in the market outlook when the "M" format is lower than the left one.
(4) It is also A practical method to judge the stock price base based on the trend of divergence between KDJ and the stock price: (A) the stock price reaches A new high, while the KD value does not reach A new high. If it is A top deviation, it should be sold; (B) the share price innovation is low, while the KD value is not low in innovation. It should be bought for the bottom deviation. (C) The share price should not reach a new high, and the KD value should be sold for the top deviation; (D) The stock price is not low in innovation, while the KD value is low in innovation and should be bought if it is a baseline deviation. It is important to note that the method for determining the top-bottom deviation of KDJ should be used, the KD value can only be compared with the previous wave of high and low points, and cannot be compared.

Practical application of KDJ indicators (III)

4. Application Experience:
(1) In practice, some short-term customers often use minute-level indicators to determine the market outlook and determine the timing of sales. In the T + 0 era, KDJ indicators are usually used for 15 minutes and 30 minutes, in the T + 0 era, KDJ is used for 30 minutes and 60 minutes to guide inbound and outbound traffic. Several empirical rules are summarized as follows: (A) If KDJ is integrated for A long time under 20 minutes, the same is true for 60-minute KDJ. Once the value of D is put on the value of 30-minute K and exceeds 20, it may lead to a rebound that lasts for more than two days, it may be an intermediate market. However, it should be noted that after the K value and the D value fork, only the K value is greater than the D value 20% or above, this cross is valid; (B) if the 30-minute KDJ at 80 or above turns down, the K value falls below the D value and falls below 80, while the 60-minute KDJ has just crossed less than 20, it indicates that there will be a back-to-archive, 30-minute KDJ may continue to go up; (C) if the value of KDJ is greater than 80 in 30 minutes and 60 minutes, and the value of K is the same as the D value after a long period of consolidation, it indicates that the price will start to fall for at least two days. (D) if the KDJ drops below 20 in 30 minutes and the KDJ is still above 50 in 60 minutes, check whether the K value of 60 minutes passes through the D value (the K value is greater than the D value of 20% ), if it is effective, it will start a new attack. If it is ineffective, it indicates that it is only a rebound in the decline process. After the rebound, it will continue to fall. (E) If KDJ stops falling before 50 in 30 minutes, the 60-minute crossover of KDJ just showed that the market may continue to rise. Currently, it is only a back-to-archive; (F) a deviation occurs for 30 minutes or 60 minutes, it can also be used as a basis for analyzing and determining the base of a large market. For details, see the previous Japanese line deviation. (G) In the ultra-strong market, KDJ can reach more than 90 minutes in 30 minutes, and invalid cross occurs repeatedly in the high position. In this case, focus on 60 Minutes of KDJ. When KDJ crosses down in 60 minutes, it may lead to a deeper back-to-archive in the short-term. (H) During the slump, KDJ may be close to 0 in 30 minutes, while the general trend is still declining. At this time, we should also watch the 60-minute KDJ, when there is a valid cross between KDJ in 60 minutes, it will lead to a strong rebound.
(2) when the market is in a very strong and weak Unilateral market, daily KDJ often becomes inactive and should switch to MACD and other medium-long indicators. When the short-term fluctuations in the stock price are violent, the daily KDJ response lags behind and should switch to CCI, ROC and other indicators; or use SLOWKD slow indicators.
(3) The parameters of KDJ are generally set to 5 on the weekly basis. The Weekly KDJ indicators have obvious bottoming and bottoming effects. Therefore, band operations can save a lot of effort and maximize profits, it should be noted that the general weekly J value increases at the bottom of the V-shaped unit in the oversold area, indicating that it only rebounded and formed a reliable intermediate market with double base; however, the J value may also fall sharply in the top of the superbuy area, so we should be vigilant. At this time, we should combine other indicators for comprehensive analysis and determination. However, when the stock market is in a bull market, after a period of time in the ultra-buy zone, the share price will continue to rise sharply.
RSI: Relative Strength Indicator
The lower limit of RSI is 0, the upper limit is, and 50 is the central axis of RSI, that is, the demarcation line between multiple and empty sides. More than 50 are strong zones (multi-party markets), less than 50 are weak zones (empty market), less than 20 are oversold areas, and more than 80 are overbought areas. RSI index purchase point: (1) W-shaped or head-shoulder-bottom when RSI Forms W-shaped or head-shoulder-bottom at low or bottom, it is the best purchase period. (2) When RSI runs below 20, it enters the oversold zone, which is easy to generate a bounce. (3) When the short-day RSI of the Golden Cross goes up through the long-day RSI, It is the buy signal. (4) When the stock index or stock price is a wave lower than a wave, while RSI is a wave higher than a wave, the stock index or stock price is easy to reverse. Selling points of RSI indicators: (1) M-shape, head-shoulder-top shape. When RSI is at a high position or at the top, M-shape or head-Shoulder
Is the best selling time. (2) When RSI runs to 80 or above, it enters the superbuy zone, and the stock price is easy to fall. (3) Top divergence when stock index or stock price innovation is high, while RSI does not reach a new high. It is the best selling time. (4) When the short-day RSI underpasses the long-day RSI, it is called the dead cross, which is a sell signal.