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1. Choose a look-back interval for the Stochastic calculation. A Stochastic formulas can study any period of time. If your chart presents daily bars, where each bar is an entire day of price action, then a 10-period look-back interval would cover 10 days of trading activity in a stock or other instrument.
2. Identify the highest and lowest prices on the chart during your look-back period. These two numbers are an integral component of the Stochastics calculation.
3. Identify the closing price of the current bar. If the bar is still forming, use the last price. The Stochastics indicator updates in real-time as a bar forms. When the bar closes, the Stochastics calculation for that bar is finished and the calculation begins again for the next bar.
4. Subtract the lowest price of the look-back period from the current closing price. Divide this result by the full price range of the look-back period, which is the highest price minus the lowest price during that entire time.
5. Multiply this result by 100. This is the 'Fast Stochastic' calculation that precedes the 'Slow Stochastics' calculation.
6. Calculate the Fast Stochastic for three consecutive bars on the chart. Then average these three results by simply summing them together and dividing by three. This final result is the Slow Stochastic.
7. Calculate this Slow Stochastic for each bar on the chart by averaging the Fast Stochastic of the last three bars (including the current bar). Plot the result on a separate sub-graph or an entirely separate graph altogether.
8. Draw a line between each plotted Slow Stochastic result. The finished product is a moving Slow Stochastic indicator line.