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Pring’s Know Sure Thing Indicator (KST) Strategy, Formula

Know Sure Thing

Know Sure Thing Indicator (KST) is a momentum oscillator based on the smoothed rate-of-change for four different time frames. Martin Pring, the author of Complete Guide to Technical Analysis An Indian Perspective, developed the indicator. Pring referred to this indicator as to the “Summed Rate of Change (KST)”. KST measures price momentum for four different price cycles. You can use the KST indicator just like any momentum oscillator.

Key Points of Know Sure Thing You should Know

  • Pring frequently applied trend lines to KST. In Know Sure Thing indicator, the trend line signals do not occur often, that such breaks reinforce signal line crossovers,Pring noticed this.
  • Know Sure Thing is generally rising when above its signal line and falling when below its signal line.
  • A rising and negative Know Sure Thing (KST) line indicates that downside momentum is in a warning.
  • Similarly, a falling and positive KST line indicate that upside momentum is fading.
  • The next point is the key features of the indicator.

Interpreting Know Sure Thing Indicator

You can use the Know Sure Thing indicator in the same way as many other momentum oscillators, like the popular relative strength index (RSI). Trading signals are originated once the KST crosses over the signal line. But traders may also look for convergence and divergence along with with the price, overbought or oversold conditions, or crossovers of the centerline.

Lots of traders combine the KST indicator along with other forms of technical analysis to maximize their odds of success. For instance, traders may look at other non-momentum indicators, chart patterns, or candlestick patterns to help in their decision-making.

Usage of the Know Sure Thing Indicator (KST):

The Know Sure Thing (KST) indicator is available for traders under the STUDIES section in the Zerodha Kite browser app. The KST indicator is also available in the Kite mobile App. The default field is close and we can set the field open, high, low or close, etc. The Lightest rate of Change is 10 and the Heaviest rate of Change is 30.

The lightest SMA period and heavy SMA period is 10 bu default. The signal period is 9 and we can also change the parameters of the SMA in the different time frames. Please check the image below to understand how we attached the KST indicator in the HDFC Bank Share Price Chart.

Apart from the above example of Zerodha Kite, here is Upstox Pro. The strategy is quite simple and straightforward. First login your account, then open any of your preferable charts. After that, the open indicator section puts the name of the indicator. And, click on the application.

KST Indicator

What are the Important Features of Know Sure Thing Indicator?

  • KST is also a momentum oscillator that is based on the smoothed rate of change over 4 separate time frames.
  • Martin Pring designed to capture four different price cycles.
  • One can use the indicator like other unbound momentum oscillators, such as the MACD.
  • The Percent Price Oscillator, and TRIX which is closely resembled KST.
  • But this Know Sure Thing indicator is not well suited for identifying overbought and oversold conditions as it is unbound.
  • Martin Pring, the creator, favored signal line crossovers and trendline breaks for signals.

Top Profit Making Strategies with KST

  • In the KST indicator, the trend line signals do not occur so often, that such breaks reinforce signal line crossovers, noticed by Pring.
Know sure thing indicator crossover
  • Know Sure Thing indicator is generally rising when above its signal line and oppositely falling when below its signal line.
Know sure thing indicator Buy
  • A rising negative Know Sure Thing (KST) line determines that downside momentum is in a warning.
Buy Sell
  • In the same way, a falling and positive KST line determine that upside momentum is fading.
Moving Average with Special k
  • Let’s move towards a little advanced strategy. Here, I’ve added MA (Moving Average) along with the indicator. Once the price crosses the MA from below and goes above. At the same time, if KST crosses the Zero lines from below, take a buy. Oppositely, book profit or short-sell when the price crosses the MA from above and KST crosses the Zero line and goes below.

Important Points to Consider about KST

  • The Know Sure Thing (KST) Indicator is a two-line indicator almost similar to the MACD.
  • A buy signal is originated once the Know Sure Thing crosses above the zero lines or makes a crossover above its signal line.
  • When the KST crosses below the zero lines or makes a crossover below the signal line a sell or short sell signal is generated.
  • The KST Indicator signal line is calculated based on the 9-period Simple MA of the KST Indicator.
  • The default setting of the particular indicator is KST (10, 15, 20, 30, 10, 10, 10, 15, 9).
  • When prices are falling and the KST indicator is rising, it is the bullish divergence.
  • And, if the stock price is rising while the KST indicator is falling, then it is a bearish divergence.
  • The KST indicator may be an effective technical tool for intraday traders.
  • As the indicator is prone to giving false signals like any other trading tool, it is advisable to use other indicators along with it.
  • The indicator along with the volume indicator is one of the most effective ways of knowing and validating trends.

Conclusion on KST Indicator:

KST occasionally throw up positive as well as negative divergences. A positive divergence developed between whenever the Index moved lower but the KST bottomed out at a higher level (it has been flagged on the chart by the two green arrows.)  Overbought and oversold zones may also be constructed and used to indicate whenever the price series in question is close to its normal overbought level.

Just like all momentum series, KST signals might be confirmed by some kind of a trend reversal confirmation from the series it is monitoring. So,  after all, we are buying as well as selling the price, not the momentum, and price occasionally experiences a linear trend that does not conveniently fall into the usual business cycle rhythm.

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