Structure of the Stochastic Indicator Explained in Brief Details
Channel: ForexBoat
Date: 2018-08-17

https://www.forexboat.com/
Get Your Free Membership Now!
Stochastic Oscillator shows the location of the close price relative to the high-low range over a certain period of the chart.
The Stochastic Indicator helps to find trend reversal by searching for a period when: the close prices are close to low prices in an upward trending market; or close prices are close to high prices in a downward trending market. This formula has two output values: %K - Simple Stochastic Indicator and %D - Smoothed Stochastic Indicator (Moving Average of %K).
Readings below 20 are considered oversold and readings above 80 are considered overbought. However, a security can continue to rise after the Stochastic Oscillator has reached 80 and continue to fall after the Stochastic Oscillator has reached 20.
Buy and sell signals can also be given when %K crosses above or below %D. However, crossover signals are quite frequent and can result in a lot of whipsaws. Again, Stochastic Indicator seems to work very well especially when combined with other strategies at the same time.