Trade Forex Trading

3 Types of Trading Stochastic Indicators

Fast, Slow and Full Stochastic

There are 3 types of Trading Stochastic Oscillators: fast, slow and full stochastic technical indicator.

All three types of the stochastic oscillator look at a set time, like 10 days. They check how the current close stacks up against the high-low range in that period.

Stochastic oscillator technical indicator works based on the principle that:

  • During an upward trend, price action tends to close at the high of the candlestick.
  • During a downwards trend, price action tends to close at the low of the candle.

Stochastic Oscillator indicator displays the momentum of the market trends, & identifies times when a xauusd is over-sold or overbought.

Fast Stochastic Indicator

Fast Stochastics Indicator - fast stochastic oscillator technical indicator plots two lines, one solid and one dotted on the technical indicator section. These 2 lines are called the %K line & %D line. In this editions the %K and %D lines are calculated differently from other versions, so as to add smoothing out.

One problem with using this fast stochastic indicator is that the %K and %D lines are too quick to react and often give false signals when they reach the over-bought and over-sold levels. The fast stochastic indicator lines tend to give fake signals or whipsaws.

Slow Stochastics Indicator

The slow stochastic smooths price data from the base formula. Many traders prefer it. This version cuts down on false signals more than the fast stochastic.

For the slow stochastic indicator. A moving average from 3 periods is used to smooth out the lines on the stochastic oscillator indicator. The moving average looks at the stochastic indicator lines data, not the price action.

Full Stochastic Indicator

Full Stochastics Indicator - this stochastic oscillator technical does not use a fixed moving average MA period, like the slow stochastic oscillator technical version above. Traders do not want to use a fixed setting to calculate the stochastic indicator.

Traders built the full stochastic for more flexibility. It improves on the first two versions.

The full stochastic lets traders set periods for fast and slow lines.

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