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 the three versions of this stochastic oscillator technical look at a given period for example the 10-day period, & measure how today's trading price close compares to the high and low range of the time period that is being considered in the calculation of stochastic oscillator indicator.

Stochastic oscillator 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 Stochastic Oscillator - fast stochastic oscillator technical indicator plots two lines, one solid and one dotted on the 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 disadvantage of using this fast stochastic indicator version is that the %K & %D lines are too sensitive and they often give fake outs when they get to the over-bought and over-sold levels. The fast stochastic indicator lines are prone to fake signals/whipsaws.

Slow Stochastic Oscillator Indicator

Slow Stochastic Oscillator Indicator - slow stochastic oscillator indicator smoothes out the price data used for the original calculation and it is used by many traders. This slow stochastic indicator version is less prone to fake outs compared and analyzed to the fast stochastic version.

For the slow stochastic indicator. A 3 period moving average is used to smooth-out stochastic oscillator indicator lines. The moving average is not that of the price action but of the stochastic technical indicator lines data.

Full Stochastic Indicator

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

Because of this reason the full stochastic was created by traders & it is more flexible than the earlier 2 stochastics oscillator technical indicator versions.

Full stochastic oscillator indicator version allows traders to choose the period they want for the fast and slow stochastic indicator line.

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3 Types of Trading Stochastic Indicators