I. Definition of KDJ Index
KDJ index is an index composed of three curves, namely K line, D line and J line. K-line measures the current price level of the market, D-line is the smooth line of K-line, and J-line is the difference between K-line and D-line. The KDJ indicator determines the overbought and oversold situation of the market by calculating the highest price, lowest price and closing price in the recent period.
Second, the calculation formula of KDJ index
1. Calculate the value of k:
K=(C-L)/(H-L)* 100
Where c stands for closing price, l stands for lowest price and h stands for highest price.
2. Calculate the value of d:
D=MA(K，N)
Where MA stands for simple moving average and n stands for calculation period.
3. Calculate the j value:
J=3K-2D
Third, the use of KDJ indicators.
1. overbought and oversold judgment:
When the K line and D line are higher than 80, it is considered that the market is overbought, and investors can consider selling at this time; When the K-line and D-line are below 20, it is considered that the market is oversold, and investors can consider buying at this time.
2. The golden fork and the dead fork:
When the K-line crosses the D-line upward, a golden cross is formed, indicating that the market is on the rise and investors can consider buying; When the K-line goes down through the D-line, it forms a dead fork, indicating that the market is in a downward trend and investors can consider selling.
3. Top deviation and bottom deviation:
When the market price is at a new high, but the K-line is not at a new high or the innovation is low, a top deviation is formed, indicating that the market may turn around and investors can consider selling; When the market price is low, but the K-line is not low or high, forming a bottom deviation, indicating that the market may rebound, investors can consider buying.
Fourth, the advantages and disadvantages of KDJ indicators
KDJ index has strong practicability and reliability, which can help investors analyze market trends and judge trading opportunities. KDJ indicators also have some shortcomings, such as sensitivity to short-term fluctuations and easy to produce false signals.
Five,
KDJ indicator is a commonly used technical analysis indicator, which can judge the overbought and oversold situation of the market by calculating the highest price, lowest price and closing price in the recent period. Investors can make buying and selling decisions according to the calculation results of KDJ indicators, combined with other indicators and market trends. When using KDJ indicators, investors should pay attention not to rely too much on a single indicator, but to comprehensively consider various factors and make accurate judgments.