Trade Forex Trading

3 Types of Index Stochastic Indicators

Variants: Fast, Slow, and Full Stochastic

There are three kinds of Index Stochastic Oscillator Indicators: fast, slow, and full stochastics.

Each version of the stochastic oscillator indicator evaluates a specific timeframe, such as a 10-day period, and compares today's closing price against the high and low range within that period as part of its calculations.

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.

The Stochastic Oscillator shows the market's momentum and points out when a stock index currency is overbought or oversold.

Fast Stochastics Indicator

Fast Stochastic Indicator - The fast stochastic oscillator tech shows two lines, a solid one and a dotted one, on the indicator part. These two lines are called the %K line and the %D line. In these examples, the %K & %D lines are figured out differently from older forms, to help create a smoother picture.

A downside to using this quick stochastic Indices tool is that the %K and %D lines react too much, often causing false signals when they hit the highest and lowest points. The lines on the fast stochastic oscillator tool tend to give incorrect signals or false alarms.

Slow Stochastics Oscillator Indicator

Slow stochastics smooth the price data from the basic calculation. Many indices traders use it. This version cuts down on false signals compared to the fast one.

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 Stochastics Indicator

Full Stochastic skips a set moving average period, unlike the slow version. Traders avoid fixed settings for this index tool.

Because of this, traders created the full stochastic, which offers more options than the previous two versions of the stochastic oscillator.

The full stochastic oscillator lets index traders pick periods for fast and slow lines.

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