A stochastic oscillator is a momentum indicator that compares an asset’s closing price to its price range over a specific time period.
To refine the oscillator’s signals, you can adjust the time period or apply a moving average to the results.
The stochastic oscillator’s value ranges from 0 to 100. It is primarily used to identify overbought (above 80) or oversold (below 20) conditions in an asset, signaling potential reversal points.
Example: If the Stochastic Oscillator (14, 1, Fast, Day) for EUR/USD
You can use the Stochastic Oscillator in the wizard by referring to it as "Stochastic Oscillator," "SO," or "Stoch."
FORMULAS
Stochastic Oscillator value (aka: %K):
(Last bar closing price − Lowest price)/(Highest price−Lowest price)×100Signal line (aka: %D):
The signal line is the simple moving average of the %K values.
PARAMETERS
Stoch (number of bars) (aka: K):
This parameter represents the number of bars used to calculate the %K value for the Stochastic Oscillator.
D:
This refers to the number of %K values used to calculate the signal line (%D).Smooth: Fast/Slow:
Slow: A value of 3, which smooths the %K by calculating the simple moving average of the last three %K values.
Fast: A value of 1, which considers a single value without smoothing the %K.
Note: All screenshots and examples are for technical demonstration purposes only. They should not be considered as recommendations for any specific trading strategy, nor do they constitute any form of advice. Please click here for further explanation