3 Types of Forex Stochastic Indicators

Fast, Slow and Full Stochastic

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

All the 3 versions of this stochastic oscillator technical indicator look at a given period e.g. the 10-day period, and measure how today's 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 upwards trend, price action tends to close at the high of the candle.
During a downwards trend, price action will tend to close at the low of the candle.

Stochastic Oscillator shows the power of the trends, and identifies times when a currency is over-sold or over-bought.

Fast Stochastic Oscillator Indicator

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

One disadvantage of using this fast stochastic indicator version is that the %K and %D lines are too sensitive and they often give forex whipsaws when they get to the overbought and over-sold levels. The fast stochastic oscillator lines are prone to fake signals/whipsaws.

Slow Stochastic Oscillator

Slow Stochastic Oscillator - slow stochastic oscillator indicator smoothes out the price data used for the original calculation & it is used by a lot of traders. This slow stochastic indicator version is less prone to whipsaws compared & analyzed to the fast stochastic version.

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

Full Stochastic Oscillator

Full Stochastic Oscillator Indicator - this stochastic oscillator indicator does not use a fixed MA(Moving Average) period, such as the slow stochastic oscillator trading version above. Traders do not want to use a fixed setting to calculate the stochastic trading indicator.

Because of this reason the full stochastic was created by traders and it's more flexible than the earlier 2 stochastic oscillator indicator versions.

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

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3 Types of Forex Stochastic Indicators