What is Know Sure Thing (KST)?

Developed by Martin Pring, Know Sure Thing (KST) is a momentum oscillator based on the smoothed rate of change for four different timeframes. Pring referred to this indicator as to the “Summed Rate of Change (KST)” in a 1992 article in Stocks & Commodities magazine. In short, KST measures price momentum for four different price cycles. It can be used just like any momentum oscillator. KST fluctuates above/below the zero line. At its most basic, momentum favours the bulls when KST is positive and the bears when KST is negative.

KST Indicator

The KST Indicator is momentum oscillators that are intended to interpret rate-of-change price data. To use the indicator efficiently, one can combine it with other technical indicators. This maximises the odds of a successful trade.

How to calculate the KST Indicator

Formula:- RCMA1 = 10-Period SMA of 10-Period Rate-of-Change 

RCMA2 = 10-Period SMA of 15-Period Rate-of-Change 

RCMA3 = 10-Period SMA of 20-Period Rate-of-Change 

RCMA4 = 15-Period SMA of 30-Period Rate-of-Change 

KST = (RCMA1 x 1) + (RCMA2 x 2) + (RCMA3 x 3) + (RCMA4 x 4)  

Why Use The KST Indicator

The Know Sure Thing indicator can be used in the same manner as many other momentum oscillators, such as the well-known relative strength index (RSI). Many traders combine the KST indicator with other forms of technical analysis to maximize their odds of success. 

How to Use The KST Indicator

Bullish Scenario:- Since KST is an oscillator means that if it goes above 0 and stays there, that generally indicates an upward trend i.e. a bullish scenario 

Bearish Scenario:- Similarly if it goes below 0 and stays there, that generally indicates a downward trend i.e. a bearish scenario.

Know Sure Thing

Building the Know Sure Thing Strategy in Mudrex

Strategy:- 

BUY:- KST crosses up 0

SELL:- KST crosses down 0

TIME FRAME:- 2Hrs

Creating on Mudrex:- 

We will use 2 BOP indicator blocks. One for selling and One for buying.

For buying we will use the following settings:-

Know Sure Thing

For selling we will use the following settings:-

Know Sure Thing

Final Strategy:-

Know Sure Thing

Testing:- 

Running backtest on Binance Futures: BTC/USDT with tick interval of 2H yielded an overall profit of 225.66%

KST Backtest

Check out the Mudrex blog for more trading strategies. If you are looking to invest in crypto and generate consistent returns, join Mudrex.

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