Stochastic Oscillator

Stochastic Oscillator

The Stochastic Oscillator is apopular indicator that shows where a securitys price has closed in proportionto its closing price range over a specified period of time. The StochasticOscillator has two components- %K and %D. %K is most often displayed as a solidline and %D is often shown as a dotted line. The most widely used method forinterpreting Other way to interpret the Stochastic Oscillator is to buy when %Krises above %D, and conversely, sell when %K falls below %D. The StochasticOscillator is a momentum indicator that shows the location of the current closerelative to the high/low range over a set number of periods. Closing levelsthat are consistently near the top of the range indicate accumulation and those near the bottom of the range indicatedistribution

The Stochastic Oscillator is a momentum indicator that shows thelocation of the current close relative to the high/low range over a set numberof periods. Closing levels that are consistently near the top of the rangeindicate accumulation (buying pressure) and those near the bottom of the rangeindicate distribution (selling pressure).

In an upward-trending market,prices tend to close near their high, and during a downward-trending market,prices tend to close near their low.

It is as a buy/sell signalgenerator, buying when fast moves above slow and selling when fast moves belowslow. Most traders use the Slow Stochastics because of its more reliablesignals