A momentum or price velocity indicator that was developed by George C. Lane. It represents a fixed period-to-period moving calculation that is very susceptible to instability and false signals since it is possible for the indicator to fluctuate wildly by simply removing data from the oldest period.
K = Lane's Stochastics
C = the latest closing price of the stock or contract
L = n-period low price of the stock or contract
H = n-period high price of the stock or contract
n = any number (Lane recommends a range of 5 to 21)
SK or %K = three-period simple moving average of K
SD or %D = three-period simple moving average of SK
Source: The Encyclopedia of Technical Market Indicators, Colby and Meyers