The Chinese name of KD] index is Stochastics, which combines the advantages of momentum concept, strength index and moving average. This indicator is a set of technical analysis tools commonly used in European and American futures markets. Because the futures risk fluctuates greatly, sensitive technical indicators are needed in short-term investment, and stochastic indicators emerge as the times require. Used in futures investment in early years, the effect is quite remarkable. At present, it is one of the most commonly used indicators in the stock market.

This index is suitable for technical analysis of short-term and medium-term stocks. Compared with the moving average, the random concept of index KD line has its own advantages. Traditionally, the moving average is only calculated by the closing price, so it can't show the real fluctuation of a market. That is, the highest and lowest prices of the day or in recent days cannot be reflected in the moving average. Therefore, some experts have gradually created some more advanced technical theories and made full use of the EMA. The KD line is one of the representative works.

The main theoretical basis of stochastic indicators is: when the price rises, the closing price tends to approach the upper end of the price range of the day; On the contrary, in the downward trend, the closing price tends to be close to the lower end of the price range of the day. Stochastics fully considers the calculation of random amplitude and short-term fluctuation of price fluctuation in its design, which makes its short-term market measurement function more accurate and effective than the moving average, and more sensitive than the strength index in short-term market overbought and oversold prediction. Therefore, the index is widely used by investors.

There are three kinds of random indicators: KD, KDJ and SKDJ.

First, the application rules of stochastic index KD

The value of 1. K and d are always between 0 and 100. When the D value is above 70, the market is overbought. When the D value is lower than 30, the market is oversold.

2. When the K value is greater than the D value, it means that the current trend is upward, so when the K line breaks through the D line, it is a buy signal. When the D value is greater than the K value, the trend is downward, so the K line falls below the D line, which is a sell signal.

3.KD indicator can not only reflect the overbought and oversold degree of the market, but also send out buying and selling signals through cross-breakthrough. However, if this crossover occurs around 50 and the trend falls into the market, the buying and selling signal can be regarded as invalid. The intersection of K-line and D-line occurs above 70 and below 30, which is effective. If KD gold exchange occurs below 20, it is the best buying point; If the KD dead fork happens above 80, it is the best selling point.

4.KD index is not suitable for stocks with small circulation and inactive trading; However, KD index is extremely accurate for large-cap stocks and popular large-cap stocks.

5. When the stochastic indicator deviates from the stock price, it is generally a turning point signal. The medium or short-term trend may have peaked or bottomed out.

6. When the rising or falling speed of K value and D value is weakened, it tends to be flat, which is an early warning signal for short-term improvement.