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3 Types of Stock Indices Trading Stochastic Indicators


Fast, Slow and Full Stochastic

There are three types of Stock Indices Trading Stochastic Oscillator Stock Indices Indicators: fast, slow and full stochastic oscillator indicator.

All the 3 versions of this stochastic oscillator stock indices indicator look at a given period for example the 10-day period, and measure how today's stock index price close compares to the high and low range of the time period that is being considered in the stock indices calculation of stochastic oscillator.


Stochastic oscillator stock indices indicator works based on the principle that:


  • During an upward stock indices trend, stock index price action tends to close at the high of the candle.
  • During a downward stock indices trend, stock index price action tends to close at the low of the candle.


Stochastic Oscillator stock indices indicator shows the strength of the Stock Indices trends, and identifies times when a stock indices is oversold or overbought.



Fast Stochastic Oscillator Stock Indices Indicator


Fast Stochastic Oscillator Stock Indices Indicator - fast stochastic oscillator stock indices indicator plots two 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 the other versions, so as to add extra smoothing.


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



Slow Stochastic Oscillator Stock Indices Indicator

Slow Stochastic Oscillator Stock Index Indicator - slow stochastic oscillator stock indices indicator smoothes out the stock index price data used for the original calculation and it is used by many Stock Indices traders. This slow stochastic stock indices indicator version is less prone to whipsaws compared to the fast stochastic version.


For the slow stochastic stock indices indicator. a 3 period moving average is used to smooth out the stochastic lines. The moving average is not that of the stock index price action but of the stochastic oscillator indicator lines data.



Full Stochastic Oscillator Stock Indices Indicator

Full Stochastic Oscillator Stock Indices Indicator - this stochastic oscillator does not use a fixed moving average period, like the slow stock indices stochastic oscillator version above. Stock Indices traders don’t want to use a fixed setting to calculate the stochastic stock indices indicator.

Because of this reason the full stochastic was developed by stock indices traders and it is more flexible than the earlier two stock indices stochastics oscillator versions.

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