Know Sure Thing (KST)

🔍 What is the Know Sure Thing?

The Know Sure Thing (KST) is a momentum oscillator developed by Martin Pring. It combines multiple rate-of-change (ROC) readings smoothed over time, creating a comprehensive view of market momentum. The indicator is designed to identify major stock market cycles and generate timely buy and sell signals.

KST is particularly effective in spotting trend changes and confirming price movements by capturing the rate at which prices change over different time frames — essentially answering the question: "How sure are we of this trend?"

⚙️ How It Works

KST blends four different ROC periods (short to long-term), each smoothed with a moving average. These components are then weighted and summed into a single line.

The formula is:

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

Where:

• RCMA1 = Moving average of the short-term ROC

• RCMA2 = MA of medium-term ROC

• RCMA3 = MA of longer-term ROC

• RCMA4 = MA of longest-term ROC

The final output is plotted as the KST line, usually alongside a signal line (a moving average of KST) for crossovers.

📖 How to Read It

Reading the Know Sure Thing is similar to most momentum oscillators:

• KST Crossing Above the Signal Line: Bullish signal — potential entry point.

• KST Crossing Below the Signal Line: Bearish signal — potential exit or short.

• KST Rising Above Zero: Indicates upward momentum is strengthening.

• KST Falling Below Zero: Indicates downward momentum is increasing.

The zero line can act as a longer-term trend filter, while crossovers are better for short-to-mid term timing.

⚙️ Best Settings

While traders can customize the periods, Martin Pring’s default settings are:

• ROC Periods: 10, 15, 20, 30

• Moving Average Periods: 10, 10, 10, 15

• Signal Line MA: 9

These settings work well for daily and weekly charts, but for intraday trading, traders often reduce the ROC and MA periods to increase sensitivity.

🧠 How to Use It in a Strategy

Here’s how traders typically integrate KST into their strategies:

1. Trend Confirmation: Use KST in conjunction with a trend indicator like Moving Averages or MACD to confirm the direction before taking trades.

2. Momentum Entry: Buy when KST crosses above the signal line near a support level or after a breakout. Sell when it crosses below near resistance.

3. Zero Line Filter: Only take long trades when KST is above zero and short trades when it’s below zero.

4. Divergences: Spot hidden bullish/bearish divergences between KST and price to anticipate reversals.

⚠️ Common Mistakes

Avoid these pitfalls when using KST:

• Ignoring Market Context: Using KST alone in sideways markets can lead to false signals. Always combine with trend or volume analysis.

• Overfitting the Parameters: Over-optimizing the periods for specific historical data reduces reliability in live trading.

• Late Signals: Like many smoothed oscillators, KST may react slower than price. Don't rely on it as a standalone entry signal.

🧠 Final Thoughts

The Know Sure Thing is a powerful, nuanced oscillator that blends multiple momentum inputs into a single readable signal. Its ability to filter noise by using several time frames makes it more reliable than single-ROC indicators. However, like all tools, it’s most effective when used in combination with trend analysis, support/resistance, and volume.

For traders seeking momentum confirmation and entry signals in trending environments, the KST can be a dependable ally — as long as you know for sure how to use it.