1. Basic concepts of KDJ

The KDJ indicator is also called the stochastic indicator. Compared with other technical indicators, the KDJ stochastic indicator responds more sensitively and quickly, so it can identify short-term trends more promptly. It is a better technical indicator for analyzing and judging short- and medium-term trend bands.

Calculation method: Based on statistical principles, through the highest price, lowest price and closing price of the last calculation period that occurred in a specific period (usually 9 days, 9 weeks, etc.) and the proportional relationship between the three, To calculate the immature random value RSV of the last calculation period, and then calculate the K value, D value and J value according to the smooth moving average method, and draw a curve chart to study and judge the price trend.

Cycle reference: For short-term investors who do small bands, 30-minute and 60-minute KDJ are important reference indicators; for investors who have designated buying and selling plans to place orders immediately, 5-minute and 15-minute KDJ can provide the best entry and exit. time.

Recommended parameters:

Ultra-short line selection: K line: 9 (some people choose to set it to 6); D line: 3; J line: 3;

Short-term selection: K line: 18; D line: 3; J line: 3;

Center line selection: K line: 24; D line: 3; J line: 3.

2. KDJ usage

K line: Also known as the quick confirmation line, if it exceeds 90, it is overbought, and if it is below 10, it is oversold.

D line: Slow main line, above 80 is overbought, below 20 is oversold.

J line: direction sensitive line.

If J is greater than 100, a short-term head will be formed. If 5 consecutive K lines are greater than 100, the effect will be better;

If J is less than 0, a short-term bottom will be formed. If 5 consecutive K lines are less than 0, the effect will be better.

Other functions of KDJ: judging trends, seeing divergences, and confirming buying and selling signals.

3. KDJ function

(1) Signal judgment

Golden Cross signal: K and D form a golden cross, which is a buy signal.

Dead cross signal: K and D form a dead cross, which is a sell signal.

It should be noted that the golden cross and the dead cross must appear at a higher or lower position. The higher or lower the position, the more reliable the conclusion. To put it simply, when a golden cross signal is formed in the oversold zone, the credibility is higher; when a dead cross signal is formed in the overbought zone, the credibility is higher; when a golden cross is hovering in the middle, mistakes are often made.

(2) Look at the divergence

Tip: When the K-line trend has one peak higher than the other, but the KDJ value goes lower and lower, it is a top divergence; when the K-line trend has one peak lower than the other, but the KDJ value goes higher and higher, it is a bottom divergence.

Conclusion: Top divergence is a bearish signal; bottom divergence is a bullish signal.

Strong confirmation signal: When the indicator deviates, the trading volume doubles, and the K-line fluctuates violently, it means that a top or bottom appears.

(3) KDJ trend line trading method

Rules of use: Connect the KDJ intersection points into a line to form a corresponding trend line. After the trend line formed by the market decline is broken, it may start a rebound trend.

A simple understanding is that after the price continues to correct for a period of time, KDJ will form a downward trend pressure line as the price moves downward. Once the price rebounds and the KDJ indicator breaks through the downward trend pressure line, the price may embark on a rebound. . When it breaks through, it is a buy signal.

(1) MACD + KDJ

Feature 1: KDJ has strong sensitivity and poor accuracy, while MACD has strong delay and high accuracy.

Usage: When judging the golden cross, if KJ simultaneously golden crosses D, and it is at a lower value, the column under the 0 axis of MACD is shrinking at this time. When the turning point is about to appear, buy, accuracy and sensitivity are guaranteed. . When judging the dead cross signal, the opposite is true.

Feature 2: KDJ has strong sensitivity. It only makes KDJ golden crosses in strong areas and has high accuracy.

Usage: The yellow and white lines of MACD are above the 0 axis, and a golden cross appears on KDJ, which is a buying opportunity. The MACD yellow and white lines are below the 0 axis, and KDJ has a dead cross, which is a selling opportunity.