What is the KDJ indicator:

The KDJ indicator is also called the stochastic indicator, which is an overbought and oversold indicator. It was originally used for futures market analysis, and later was widely used in the short and medium term of the stock market. Trend analysis is a very common technical analysis tool used in futures and stock markets.

KDJ indicator history:

KDJ indicator was first developed on the basis of William indicator. However, William indicator only judges the overbought and oversold phenomenon of stocks, while KDJ indicator integrates The concept of moving average is understood and a buying and selling signal with certain reference value is formed.

How to look at the KDJ line:

The KDJ indicator consists of K value, D value and J value. In trading software, it is often drawn according to the K value, D value and J value of each period. It forms white, yellow, and purple curves to form various shapes, which are of certain value for grasping the short- and medium-term market trends. The design and verification of trigger-type fund fixed investment based on KDJ and MACD indicators. The KDJ indicator uses the highest price, the lowest price and the closing price as the main data. In the calculation process, it incorporates some advantages of momentum concepts, strength indicators and moving averages. First, Calculate the immature random value RSV of the last period through the highest price, lowest price and closing price of the last period that occurred in a period, and then calculate the K value, D value and J value according to the smooth moving average method. Then draw a three-color curve chart to intuitively reflect the strength of the price trend and the overbought and oversold phenomena.

First, consider the value of KD. The value range of KD is 0 to 100, which is divided into several areas: above 80 is the overbought area, below 20 is the oversold area, and the rest are wandering areas. According to this division, if KD exceeds 80, you should consider selling, and if KD is below 20, you should consider buying. It should be noted that the above division is only a preliminary process of applying the KD indicator and is only a signal. It is easy to cause losses if you operate entirely according to this method.

Second, consider the shape of the KD indicator curve. When the KD indicator forms a head and shoulders pattern and multiple tops (bottoms) at a higher or lower position, it is a signal to take action. Note that these forms must appear at a higher or lower position. The higher or lower the position, the more reliable the conclusion.

Third, consider the intersection of KD indicators. The relationship between K and D is just like the relationship between stock price and MA. There are also issues such as death cross and golden cross. However, the application of cross here is very complicated and comes with many other conditions. Take K crossing D from bottom to top as an example: K crossing D above is a golden cross, which is a buy signal. But whether you should buy the golden cross depends on other conditions. The first condition is that the position of the golden cross should be relatively low, in the oversold zone. The lower the better. The second condition is the number of intersections with D. Sometimes in the low position, K and D have to cross back and forth several times. The minimum number of crossovers is 2, and the more, the better. The third condition is the position of the intersection point relative to the low point of the KD line. This is the often said "right-side intersection" principle. K only intersects D when D is already looking up, which is much more reliable than intersecting D when D is still falling.

Fourth, consider the divergence of the KD indicator. When KD is at a high or low level, if there is a deviation from the stock price trend, it is a signal to take action.

Fifth, the value of J indicator exceeds 100 and is lower than 0, which belongs to the abnormal area of ??price. Greater than 100 means overbought, and less than 0 means oversold. You can judge it in conjunction with other indicators, such as the MACD indicator.