3 Types of Stochastic Indicators

Fast, Slow and Full Stochastic

There are 3 types of Stochastic Oscillator Indicators: fast, slow and full stochastic oscillator.

All the 3 versions of this stochastic oscillator indicator look at a given period e.g. the 10-day period, & 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 candlestick.

Stochastic Oscillator displays the strength of the trends, & identifies times when a trading is oversold or over bought.

Fast Stochastics Indicator

Fast Stochastic Indicator Indicator - fast stochastic oscillator trading plots two lines, one solid & one dotted on the indicator section. These 2 lines are called the %K line and %D line. In this versions the %K and %D lines are calculated differently from other versions, so as to add smoothing out.

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 & oversold levels. The fast stochastic indicator lines are prone to fake signals/whipsaws.

Slow Stochastics Indicator Technical Indicator

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

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

Full Stochastic Indicator

Full Stochastics Oscillator Technical Indicator - this stochastic oscillator indicator does not use a fixed moving average MA period, like the slow indices trading stochastic oscillator version above. Indices traders do not want to use a fixed setting to calculate the stochastic stock indicator.

Because of this reason the full stochastic was developed by traders & it's more flexible than the earlier 2 stochastics oscillator trading versions.

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

Get More Courses and Topics:

Trade Stock Indices

3 Types of Stochastic Indicators