How Stochastic Oscillator Forex Indicator Works
The Stochastic oscillator forex indicator uses time periods to calculate the fast and slow lines. The number of time periods used to calculate the %K and %D line depends on what purpose a Forex trader is using the Stochastic oscillator forex indicator for.
- A forex trader using the Stochastic oscillator forex indicator in combination with a forex trend indicator to see overbought and oversold levels, one can use periods 10 periods.
- The default period used by stochastic forex oscillator indicator is 12.
Forex traders should not use stochastic forex indicator alone for making forex trading decisions, but should use this Stochastic oscillator forex indicator in combination with other forex technical indicators.
In ranging forex markets this Stochastic oscillator forex indicator can be used to show oversold/overbought levels as potential profit taking points when trading the forex market.
Oversold and overbought forex levels by default are 20 and 80, but other forex traders use 30 and 70.
To look for "overbought" region at the indicator's 80% stochastic forex oscillator mark is used
To look for "oversold" region 20% stochastic forex oscillator mark is use.
The overbought and oversold levels are displayed as dotted horizontal lines on the stochastic oscillator forex indicator. These levels can also be adjusted to the 30 and 70 levels.
Overbought and Oversold Levels on Stochastic Oscillator Forex Trading Indicator