3 Types of Stochastic Indicators

Fast, Slow & Full Stochastic

There are three types of Stochastic Oscillator Technical Indicators: fast, slow & full stochastic oscillator.

All the 3 versions of this stochastic oscillator indicator look at a given period for example the 10-day period, and measure how today's price close compares to the high and low range of the time period that is being considered in the trading calculation of stochastic oscillator.

Stochastic oscillator technical indicator works based on the principle that:

During an upward trend, stock price action tends to close at the high of the candle.
During a downwards trend, stock price action tends to close at the low of the candle.

Stochastic Oscillator Technical indicator shows the strength of the trends, and identifies times when a trading is oversold or over bought.

Fast Stochastic Oscillator Indicator Technical Indicator

Fast Stochastic Oscillator Indicator - fast stochastic oscillator trading plots two lines, one solid & one dotted on the trading indicator section. These two lines are called the %K line & %D line. In this versions the %K and %D lines are calculated differently from the other editions, so as to add extra smoothing.

One disadvantage of using this fast stochastic stock indicator version is that the %K and %D lines are too sensitive and they often give indices whipsaws when they get to the overbought and oversold levels. The fast stochastic lines are prone to fake signals/whipsaws.

Slow Stochastic Oscillator Indicator Technical Indicator

Slow Stochastic Oscillator Indicator - slow stochastic oscillator indicator smoothes out the price data used for the original calculation and it is used by many traders. This slow stochastic stock indicator version is less prone to whipsaws compared to the fast stochastic version.

For the slow stochastic stock indicator. A 3 period moving average MA is used to smooth out the stochastic lines. The moving average isn't that of the price action but of the stochastic oscillator trading lines data.

Full Stochastic Oscillator Technical Indicator

Full Stochastic Oscillator Technical Indicator - this stochastic oscillator trading indicator doesn't use a fixed moving average MA period, like the slow indices trading stochastic oscillator version above. Indices traders don’t want to use a fixed setting to calculate the stochastic stock indicator.

Because of this reason the full stochastic was developed by traders & it is more flexible than the earlier two stochastics oscillator trading versions.

Full stochastic oscillator indicator version allows stock traders to choose the period they want for the fast and slow indices trading stochastic indicator line.

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3 Types of Stochastic Indicators