Stochastic oscillator Indicator – How to trade with

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What we will learn here:

Different categories of Technical indicators

About Stochastic oscillator (General information)

How to use it in our trades

Technical Setting and how you can use it with Moving Average

Try more in live chart

Totally we can divide Technical indicators into 3 different categories:

Trend-following indicators: (some example)

I. Moving averages (both simple and exponential),

II. MACD (Moving Average Convergence Divergence),

III. Parabolic SAR,

IV. ADX (Average Directional Movement Index)

Momentum indicators: (some example)

I.Relative Strength Index (RSI),

II. Stochastics,

III.Commodity Channel Index (CCI)

Volatility indicators : (some example)

I. Bollinger Bands and

II. ATR (Average True Range)

About Stochastic Oscillator

  Late 1950 Dr. George Lane developed this indicator as a momentum indicator to realize Resistance and Support levels. This indicator based on closed price and historical movement and reaction of the market. According to Dr. Lane idea as a developer, this indicator to be used with cycles, Elliott Wave Theory and Fibonacci retracement for timing.

Stochastic oscillator included two lines: the First one is the actual value of the oscillator for each session, and the second one reflecting its three-day SMA (Simple Moving Average). Price is thought to follow momentum, so the intersection of these two lines is considered to be a signal that a reversal may be in the works, as it indicates a large shift in momentum from day to day. The stochastic oscillator is always between 0 and 100. This makes it a useful indicator of overbought and oversold conditions. As you can see below, technically this is the way how this indicator works, however today we will talk about how we can use it and not going into mathematics calculation.

Stochastic oscillator is useful indicator of overbought and oversold conditions.


Standard Setting for Stochastic Oscillator – Try to use

standard setting unless if you have clear idea what is

Your plan and what you want to do

5 , 3 , 3  = H4 – Daily

10, 3, 3 = M15 – H1

14, 3, 3 = M15 – H1

MA: A Level : 1 / B Level: 50

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