How Stochastic Oscillator Trading Indicator Works
The Stochastic oscillator indicator uses time periods to calculate the fast & slow lines. Number of time periods used to calculate the %K & %D line depends on what purpose a gold trader is using the Stochastic oscillator technical indicator for.
- A trader using the Stochastic oscillator indicator in combination with a trend indicator to see overbought & oversold levels, trader can use periods 10 periods.
- The default period used by stochastic technical indicator is 12.
Traders should not use stochastic indicator alone for making xauusd decisions, but should use this Stochastic oscillator technical in combination with other technical indicators.
In ranging markets this Stochastic oscillator indicator can be used to show oversold/over-bought levels as potential profit taking points when trading the market.
Oversold & overbought levels by default are 20 and 80, but other traders use 30 and 70.
To look for "overbought" region at the indicator's 80% stochastic oscillator mark is used
To look for "oversold" region 20% stochastic oscillator mark is use.
The overbought and oversold levels are displayed as dotted horizontal lines on the stochastic oscillator. These levels can also be adjusted to the 30 and 70 levels.
Overbought and Oversold Levels on Stochastic Oscillator
Study More Tutorials & Courses:
- How to Develop a Index Trading Plan
- How to Add Demark Projected Range FX Indicator in Trading Chart
- How to Use MT5 DeMarks Range Expansion Stock Indices Indicator
- How Do I Add DJI 30 Index on MT5 Platform?
- How Do I Find MetaTrader 4 FTSEMIB40 Indices Chart?
- Where Can You Find a Learn Online Gold Tutorial Website?
