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One method
when using the Stochastic Oscillator in currency trading is to sell when the either line rises above 80 and then falls back below. Vice versa, purchase when either %K or %D decreases below 20 and then again reaches that level. Another way of action is to watch timing trades and to sell when the %K line shifts below the %D line and purchase when the %K line shifts over the %D line. |
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you should always follow the discrepancies. For instance, if prices in the market of currency trading start reaching new peaks and the Stochastic Oscillator fails to surpass its previous peaks, the indicator usually demonstrate in which direction prices are moving. |
An interval from 0 up to 100
comprises all the indicator's possible values. While building an indicator in currency trading the two control levels are set on the chart where the top level is set at 80 and the low level is set on the 20. If it is crossed by STOCH lines demonstrate the oversell or overbuy situation in the market of currency trading. The indicator demonstrates oversaturation with sell trades in the market, so the zone of purchases is started if STOCH lines shift below bottom control level. And the indicator demonstrates oversaturation with purchase trades in the market, so the zone of sales is started if the STOCH lines shifts over the top control level.
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. As a rule,
they use the following interpretation of the indicator:
- If the curve %K crosses the curve %D from below upward you should purchase.
- If the curve %K crosses a curve %D from top to downward you should sell.
- If oscillator - %K or %D - shifts below the line, and then again crosses the bottom level upwards you should purchase.
- If oscillator moves above the line, and then crosses the top level downwards you should sell.
- The presence of discrepancy is the situation when, for instance, the prices have reached new highs, and the values of oscillator turned out to be too weak for reaching new peak values.
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In currency trading,
we advise you to test this indicator in demo account trading before using it in real account.
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