3 Types of Forex Stochastic Indicators

Stochastic: Fast, Slow, and Full Readings

The Forex Stochastic Oscillator comes in three distinct variations: fast, slow, and full stochastic technical indicators.

All three versions of the stochastic oscillator look at a set period, like 10 days. They check how today's close stacks up against the high and low in that range.

The stochastic oscillator works on this idea.

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.

The Stochastic Oscillator evaluates trending strength and identifies over-sold or over-bought conditions in currency trading.

Fast Stochastic Oscillator Indicator

Fast Stochastics Oscillator Indicator - fast stochastic oscillator indicator plots 2 lines, one solid and one dotted on the technical 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.

A drawback of using this fast version of the stochastic indicator is that the %K and %D lines exhibit high sensitivity, frequently resulting in forex whipsaws when reaching overbought and oversold zones. The fast stochastic oscillator lines may generate misleading signals or whipsaws.

Slow Stochastics

Slow Stochastic Oscillator - This indicator involves smoothing the underlying price data used in its initial calculation and is frequently utilized by many traders. This smoothed version of the stochastic indicator is less susceptible to erratic price swings ("whipsaws") when contrasted with the analysis derived from the fast stochastic version.

For the slow stochastic technical indicator, a 3-period moving average is applied to smooth the lines of the stochastic oscillator. This moving average is derived from the stochastic indicator's data rather than the underlying price action.

Complete Stochastics Indicator.

The Full Stochastic Oscillator Indicator does not adhere to a predetermined Moving Average period, unlike the slow stochastic oscillator version mentioned previously. Traders prefer not to use a fixed configuration for calculating the stochastic trading indicator.

Because of this, traders made the full stochastic, which is more versatile than the first two versions of the stochastic oscillator indicator.

The full stochastic oscillator allows those in the market to pick the duration they want for the indicator lines that show fast and slow stochastic movement.

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3 Types of Forex Stochastic Indicators