Stochastics

Stochastics help traders determine potential overbought and oversold conditions. The indicator is measured on a fixed scale from 1 to 100 where readings above 80 are considered overbought, while readings below 20 are considered oversold.

The Stochastic indicator is represented by two lines. The first line, called %k, or fast stochastic, represents the latest price closes as a percentage of the specified price range. Typically, traders use 15 price bars as the range. The second line, called %D, or slow stochastic, is usually a 3-period moving average of %k. Trade signals are created when the two lines cross.


Stochastics