3 Types of Index Stochastic Indicators

Fast, Slow and Full Stochastic

There are 3 types of Index Stochastic Oscillator Indicators: fast, slow and full stochastics.

All the three editions of this stochastic oscillator indicator look at a given period e.g. the 10-day period, & measure how today's price close compares to the high & low range of the time period that is being considered in the Indices calculation of stochastic oscillator.

Stochastic works based on the principle that:

During an upwards market trend, price action tends to close at the high of the candlestick.
During a downwards trend, price action will tend to close at the low of the candlestick.

Stochastic Oscillator indicator shows the momentum of the market trends, and identifies times when a Stock Index currency is over-sold or over-bought.

Fast Stochastic Oscillator

Fast Stochastic Oscillator Indicator - fast stochastic oscillator technical 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 & %D lines are calculated differently from other versions, so that to add smoothing out.

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

Slow Stochastic Oscillator Indicator

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

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

Full Stochastic Oscillator Indicator

Full Stochastic Oscillator - this stochastic oscillator does not use a fixed moving average period, such as the slow stochastic oscillator edition above. Traders do not want to use a fixed setting to calculate the stochastic Indices indicator.

Because of this reason the full stochastic was developed by traders & it's more flexible than the earlier two stochastic oscillator editions.

Full stochastic oscillator indicator edition allows Indices traders to choose the period they want for the fast & slow stochastic indicator line.

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3 Types of Index Stochastic Indicators