Developed by Martin Pring, the Know Sure Thing (KST) is a momentum oscillator that simplifies the interpretation of rate-of-change data for traders. Traders often use along with other analytical tools to predict market trends or valuation of assets.
This is a momentum oscillator that is often used in conjunction with rate-ofchange price data to understand price changes.
In addition to trading signals produced when the KST crosses above or below the signal line, traders are looking for overbought or oversold situations in the market.
Traders may also combine the KST with other technical analysis techniques in order to increase their chances of making a profitable transaction.
Taking the simple moving average (SMA) of four distinct rate-of-change (ROC) periods and adding them together to obtain the KST, and then constructing a signal line by taking the 9-period SMA of the KST, is how the KST is calculated.
In order to compute the KST, use the following equation −
KST = (RCMA #1 ☓1)+(RCMA #2 ☓2)+(RCMA #3 ☓3)+(RCMA #4 ☓4)
RCMA #1 = 10 period SMA of 10 period ROC
RCMA #2 = 10 period SMA of 15 period ROC
RCMA #3 = 10 period SMA of 20 period ROC
RCMA #4 = 10 period SMA of 30 period ROC
After using the above formula, one would have to find out the SMA value of the KST for all the nine periods for the last step of signal line.
KST may be used in the same way as many other momentum oscillators, such as the well-known relative strength index, to determine market direction and movement (RSI). Trading signals are produced when the KST crosses over the signal line; however, traders may also check for other indicators such as price convergence and divergence, overbought or oversold situations, or crossings of the center line to identify trading opportunities.
Many traders use the KST indicator in conjunction with other types of technical analysis in order to increase their chances of success. For example, traders may use various non-momentum indicators, chart patterns, or candlestick patterns to assist them in making trading decisions.
Traders may have also looked at other types of technical analysis in order to increase their chances of making a profitable transaction. In addition, these insights may be utilized to prevent entering into less lucrative trades that are recommended by the KST indicator.