Know Sure Thing (KST) – What It Is & How to Trade with It

Know Sure Thing (KST) – What It Is & How to Trade with It

What is the Know Sure Thing (KST)?

The Know Sure Thing (KST) is a momentum oscillator developed by Martin Pring to measure trend strength and momentum shifts. It is calculated using four different rate-of-change (ROC) periods, making it more responsive to market conditions.

The KST formula is:
KST = (ROC1 × W1) + (ROC2 × W2) + (ROC3 × W3) + (ROC4 × W4)

Where:

• ROC1, ROC2, ROC3, ROC4 = Rate of Change of price over different periods.
• W1, W2, W3, W4 = Weighting factors to smooth the calculation.
• Signal Line: A 9-period Simple Moving Average (SMA) of the KST line.

Key Features of Know Sure Thing (KST)

• Identifies bullish and bearish trends based on momentum shifts.
• Smooths out short-term fluctuations for better trend analysis.
• Works well in both trending and ranging markets.

How to Use KST in Forex Trading

1. KST Crossover Strategy

Traders use crossovers between the KST line and the Signal line to generate trade signals:

• Buy Signal: When KST crosses above the signal line (bullish momentum).
• Sell Signal: When KST crosses below the signal line (bearish momentum).

2. Zero Line Crossover Strategy

The zero line acts as a trend confirmation tool:

• Buy Signal: KST crosses above zero, indicating bullish momentum.
• Sell Signal: KST crosses below zero, indicating bearish momentum.

3. KST Divergence Strategy

Divergence between price and KST can indicate trend reversals:

• Bullish Divergence: Price forms a lower low, but KST forms a higher low (buy signal).
• Bearish Divergence: Price forms a higher high, but KST forms a lower high (sell signal).

4. KST with Moving Averages

Pairing KST with a moving average (e.g., 50 EMA) helps confirm trade signals:

• Buy when: KST is above zero & price is above the 50 EMA.
• Sell when: KST is below zero & price is below the 50 EMA.

Pros and Cons of Using Know Sure Thing (KST)

✅ Pros:

• Smoother than traditional momentum indicators.
• Provides clear trend confirmation signals.
• Works well across different timeframes.

❌ Cons:

• Can lag in fast-moving markets.
• Requires confirmation from other indicators for best results.

Final Thoughts

The Know Sure Thing (KST) is a powerful trend-following oscillator that helps traders identify market momentum, confirm trend strength, and detect reversals. When combined with moving averages or divergence analysis, KST enhances trade accuracy and decision-making.