BigProfit Profit through Algo & Technical Trading
Know Sure Thing (KST), is a momentum indicator based on Rate of Change (ROC). It helps traders interpret rate-of-change price data by providing trading signals generated from centerline and signal line crossovers.
Divergences produced by this strategy can also help identify trend reversals. Learn to use IQ Option with its assistance.
Identifying Divergences
Martin Pring created the KST, or Know Sure Thing, as a momentum indicator. Based on smoothed rate-of-change calculations and four cycles of price data combined into one singular indicator that helps traders detect divergences as well as centerline and signal line crossings.
Divergences are indicators that a trend is shifting; typically a positive divergence indicates an upward market movement while negative divergences indicate downward momentum.
Technical indicators, like the Know Sure Thing (KST), allow traders to quickly identify trend changes. Successful traders using KST understand that prices follow momentum so if momentum is high then so too will prices follow suit and rise over a short or even long-term period.
Divergences come in two varieties, regular and hidden. Regular divergences occur when price and indicator move in opposite directions, often signalling that a trend change may be on its way – for instance if price reaches new all-time highs while KST sets lower highs, it could signal that bullish to bearish momentum may change soon.
Hidden divergences can be hard to spot and more confusing, making identification harder than normal. To identify hidden divergences it is vitally important to scrutinize KST closely – typically it should remain positive but may occasionally drop below zero, however this should only be taken as temporary slowdown of upward momentum rather than as a signal to sell the market.
The KST is a widely-used momentum trading indicator due to its multiple useful features, including centerline and signal line crossovers. On IQ Option’s platform, it can easily be added by clicking “Add Studies”, choosing KST from the list, selecting appropriate time frame settings and clicking on “OK.” Once added, this study appears as its own line on graph alongside other important indicators.
Identifying Convergence
Martin Pring invented the Know Sure Thing indicator (KST), a momentum oscillator. This momentum oscillator combines data from four separate time frames into one indicator for easy analysis; KST allows traders to identify any change in momentum through monitoring its smoothed rate of change across these cycles.
KST provides traders with a powerful tool for identifying trend reversals. Additionally, traders often combine it with other forms of technical analysis in order to increase the odds that their trades are successful; trend channels, chart patterns and candlesticks are some of the common non-momentum indicators used alongside KST.
Like other momentum oscillators, the Know Sure Thing indicator (KST) can be used to spot potential trend reversals by recognizing divergences between its centerline and signal line. Furthermore, when its signal line crosses over or under its centerline this can be taken as either a buy signal or sell signal respectively.
At first glance, the KST’s formula may appear complex. However, its core logic boils down to smoothed average of four rates of change values – this allows it to more closely track small market changes than simple moving averages (SMAs), but can cause it to overreact in short-term price movements.
To gain an understanding of how the KST works, we can take a look at its graph and analyse its individual components. The top panel displays Tesla’s closing price while the bottom panel reveals calculated components of KST indicator. KST is an unbounded momentum indicator; therefore it lacks typical overbought/oversold levels seen with other momentum indicators, giving traders a more accurate depiction of current market momentum. This may make reading harder but may provide them with more accurate forecasting information.
Identifying Trend Reversals
Know Sure Thing is a momentum indicator used to detect trend reversal opportunities and can assist day traders in increasing accuracy and increasing the probability of profitable trades. However, to maximize its use it is crucial that traders understand how momentum indicators function: momentum indicators measure price movement by measuring speed and direction simultaneously while trend-following strategies use these same indicators alongside others market indicators to detect possible trading opportunities.
One popular momentum indicator is Moving Average Convergence Divergence (MACD). This technical indicator utilizes two moving averages to reveal trends and provide trade signals, as well as identify trend reversals and enter or exit positions. MACD uses two moving averages – simple moving average (SMA) and exponential moving average (EMA) – to calculate its signal, with SMA and EMA crossing over each other signifying potential trend change and divergences between SMA and EMA often signaling potential trend reversals or entering and exiting positions. MACD can also detect divergences between SMA and EMA, signifying potential trend reversals or enter/exit positions when entering and exiting positions using two moving averages – simple moving average (SMA) and exponential moving average (EMA).
Martin Pring developed the Know Sure Thing (KST) oscillator as another popular momentum indicator. Based on a smoothed rate of change for four different timeframes, KST can help identify trend reversals through centerline and signal line crossovers and can even serve as an early warning of trend reversal events.
To utilize the KST indicator on an IQ Option chart, first add it using its add feature and typing out its name so it appears in your list of studies. After it has been added successfully, begin analyzing it to fully comprehend how it functions.
The KST oscillator is an invaluable asset when it comes to identifying trading opportunities, quickly revealing changes in momentum. It can assist in finding potential entry and exit points by detecting overbought/oversold zones; and can provide trading signals when signal lines cross each other – ideal for finding trading signals during overbought/oversold conditions. In order to make the most of this tool, experiment with different KST settings according to market conditions.
Identifying Trend Reversal Opportunities
Martin Pring created the Know Sure Thing indicator as a momentum oscillator to simplify rate-of-change readings by consolidating data from four time frames into one indicator, creating an easily read smoothed indicator to help identify trends or signal reversals.
The KST is an invaluable trading tool, serving to confirm trend signals. When prices rise above zero during an uptrend, for instance, its presence signals this upward momentum; conversely when prices decline below zero during a downtrend it indicates this as well as price divergences and ranging markets. Recognizing trend reversals is essential when engaging in momentum trading strategies, and with KST traders can more quickly detect such opportunities.
Be mindful that KST can produce false buy and sell signals. To mitigate this risk, traders should wait for strong signals in the price – for instance through price pattern completion, trendline violation or an inflection point – which will then trigger momentum buy or sell signals.
Know Sure Thing (KST) indicator can also be used to detect overbought and oversold levels, in addition to trend reversals. An uptrend will be indicated if weighted and smoothed ROC is above zero line while for downtrends below this line, KST indicators provide further confirmation.
KST can be used in conjunction with other momentum indicators and chart patterns to maximize trade potential, increasing chances of success while simultaneously increasing profits. Furthermore, traders can use KST as an indicator for identifying range-bound markets by watching for when its center and signal lines cross.
To add the Know Sure Thing indicator on IQ Option charts, users must first login and select an asset before clicking on “Indicators” tab and selecting KST from available indicators list. After it is added to their chart, KST will appear as separate window below price chart where users can set appropriate parameters for it.
