Overview: The Stochastic Momentum Index, developed by William Blau, first appeared in the January 1993 issue of Stocks & Commodities magazine. This indicator plots the closeness relative to the midpoint of the recent high/low range.
Interpretation: The Stochastic Momentum Index has two components: %K and %D. %K is most often displayed as a solid line and %D is often shown as a dotted line. The most widely used method for interpreting the Stochastic Momentum Index is to buy when either component raises above 40 or sell when either component falls below 40. Another way to interpret the Stochastic Momentum Index is to buy when %K raises above %D, and conversely, sell when %K falls below %D.
Parameters: str Symbol int %K Periods int %K Smoothing int %K Double Smoothing int %D Periods int Moving Average Type int %D Moving Average Type
The most commonly used arguments are 13 for %K periods, 25 for %K smoothing, 2 for %K double smoothing, and 9 for %D periods.
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