CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The KDJ indicator

The KDJ indicator is a stochastic oscillator. A stochastic oscillator is a momentum indicator. A momentum indicator detects situations in which a financial instrument is overbought or oversold.

Typical for the KDJ indicator is the green J-line. The name J-line comes from the distinct movement made by this line. These movements look like a succession of the letter J.

When the %K and %D lines are at the bottom range and the J-line is below 0 an instrument is considered ‘oversold’. This represents an opportunity to buy. Likewise, a value of J above 100 combined with %K and %D at the top range indicates an instrument which is ‘overbought’. This represents a short sell opportunity.

These are the advantages of the KDJ indicator:

  • Can be used on all instruments.
  • Accurate for short-term price movements.
  • Easy to understand.
  • Can be used as a trading signal to open positions.

This example shows the KDJ indicator. J-line dips below the 0-line are short-term buy opportunities, if the %K and %D lines are also in the bottom range. One buy signal is visible in the chart.

KDJ indicator long signal.


This example shows the KDJ indicator. J-line spikes above the 100-line are short sell opportunities, if the %K and %D lines are also in the top range. Three short sell signals are visible in the chart.

KDJ indicator short sell signal.

The KDJ indicator can be useful as a scalping method or when day trading on smaller time frames.

Practical implementation

Open the chart of an instrument. In the WHS Proposals folder, select the KDJ indicator.