Stochastic Oscillator (SO)

What is a stochastic oscillator and how can I use it?

Josh avatar
Written by Josh
Updated over a week ago

A stochastic oscillator is a momentum indicator comparing an asset’s closing price with a range of its prices over a set period of time.

The oscillator can be smoothed out by adjusting the time period or taking a moving average of the result.

The value of the stochastic oscillator moves between the bounds of 0 and 100 and is used to determine if an asset is overbought (above 80) or oversold (below 20).

Example: If the Stochastic Oscillator (14, 1, Fast, Day) of EUR/USD 

You can use the Stochastic Oscillator in the wizard using the words Stochastic Oscillator or with the abbreviations SO or Stoch.  


Stochastic oscillator value (aka: %K) = (Last bar closing price  -  Lowest price) / (Highest price -  Lowest price) * 100

Signal line (aka: %D) is a simple moving average of D values of %K


Stoch number of bars (aka: K) stands for the number of bars to be taken in to the stochastic calculation value (aka: %K)

D stands for the number of %K values to be used for the signal line (aka: %D). 

Smooth: Fast/Slow

Slow will smooth the value of %K by calculating the simple moving average of 3 values

Fast will consider 1 value normally, without smoothing the %K

*Please note, all screenshots and examples are shown for the purpose of a technical demonstration only and should not in any way be construed as recommending any type of trading strategy and they do not constitute any form of advice. Please click here for further explanation.

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