# Know Sure Thing (KST): Definition, Calculation, and Trading Signals

## What Is the Know Sure Thing (KST)?

The Know Sure Thing (KST) is a momentum [oscillator](https://www.investopedia.com/terms/o/oscillator.asp) developed by Martin Pring to simplify rate-of-change readings for traders. It uses smoothed-rate-of-change calculations with signal lines to identify trading signals and is often combined with other technical analysis tools for better market insights.

### Key Takeaways

*   The Know Sure Thing (KST) is a momentum oscillator created to simplify the rate-of-change for traders.
*   It generates trading signals when the KST line crosses over the signal line.
*   Calculating the KST involves using SMAs of different ROC periods, weighted and summed.
*   The KST indicator is often used with other technical analysis tools for improved trading success.

## How to Calculate the Know Sure Thing (KST) Indicator

The KST is calculated by taking the [simple moving average](https://www.investopedia.com/terms/s/sma.asp) (SMA) of four different [rate-of-change](https://www.investopedia.com/terms/r/rateofchange.asp) (ROC) periods, adding them together to come up with the KST, and creating a signal line by taking the 9-period SMA of the KST.

The KST is calculated with the following equation:

$\begin{aligned} &\text{KST} = ( \text{RCMA \#1} \times 1 ) + ( \text{RCMA \#2} \times 2 ) \ + \\ &\phantom { \text{KST} = } (\text{RCMA \#3} \times 3 ) + ( \text{RCMA \#4} \times 4) \\ &\textbf{where:} \\ &\text{RCMA \#1} = \text{10-period SMA of 10-period ROC} \\ &\text{RCMA \#2} = \text{10-period SMA of 15-period ROC} \\ &\text{RCMA \#3} = \text{10-period SMA of 20-period ROC} \\ &\text{RCMA \#4} = \text{15-period SMA of 30-period ROC} \\ \end{aligned}$

The [signal line](https://www.investopedia.com/terms/s/signal_line.asp) is calculated using the 9-period SMA of the KST value.

## Interpreting the Know Sure Thing (KST) for Trading Decisions

The KST indicator can be used in the same manner as many [other momentum oscillators](https://www.investopedia.com/terms/t/tsi.asp), such as the well-known [relative strength index](https://www.investopedia.com/terms/r/rsi.asp) (RSI). Trading signals are generated when the KST crosses over the signal line, but traders may also look for convergence and divergence with the price, overbought or oversold conditions, or [crossovers](https://www.investopedia.com/terms/c/crossover.asp) of the center line.

Many traders pair the KST indicator with other analyses to increase their success chances. Traders might consider other indicators, chart patterns, or [candlestick](https://www.investopedia.com/terms/c/candlestick.asp) patterns to aid decision-making.

> **Fast Fact**
>
> In a 1992 Stocks and Commodities article, Pring called it "Summed Rate of Change (KST)," yet "KST" stuck.

## Real-Life Example: Utilizing Know Sure Thing (KST) in Trading

Let's take a look at an example chart:

![Image](https://www.investopedia.com/thmb/2lQX84ilTy0wpyweXuuRT85UlS4=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_INV_final_Know_Sure_Thing_KST_Jan_2021-01-3df1c905c3a64130a3f62595928714df.jpg)

**

In the example above, the KST reached overbought levels in early February and eventually crossed over, creating a timely [sell signal](https://www.investopedia.com/terms/s/sell-signal.asp). It also crossed over in late February, mid-March, and mid-April with limited success. Key: look for [overbought](https://www.investopedia.com/terms/o/overbought.asp)/[oversold](https://www.investopedia.com/terms/o/oversold.asp) conditions and a crossover to signal the trade.

Traders may have also looked at other forms of [technical analysis](https://www.investopedia.com/terms/t/technicalanalysis.asp) to maximize their odds of a successful trade. For example, traders looking at the above chart may have considered the significant bearish [volume](https://www.investopedia.com/terms/v/volume.asp) on the day that the signal occurred or the candlestick patterns leading up to the trading signal when making their decision. These insights could also be used to avoid making less profitable trades suggested by the KST indicator.

## The Bottom Line

The Know Sure Thing (KST), developed by Martin Pring, is a momentum oscillator designed to help traders interpret rate-of-change readings. It's calculated from four smoothed rate-of-change periods to create the KST and a signal line, generating buy or sell signals when the two cross and highlighting overbought or oversold conditions. Similar to tools like RSI, KST works best when combined with other technical indicators to strengthen trading decisions.  

> **Article Sources**
>
> 1.  Stocks and Commodities. "[Summed Rate Of Change (KST)](https://store.traders.com/-v10-c09-summed-pdf.html?viewfullsite=1)." Accessed Aug. 15, 2021.