How Stochastic Oscillator Stock Indicator Works
The Stochastic oscillator stock indicator uses time periods to calculate the fast and slow lines. The number of time periods used to calculate the %K and %D line depends on what purpose a Stock trader is using the Stochastic oscillator stock indicator for.
- A stock trader using the Stochastic oscillator stock indicator in combination with a stock trend indicator to see overbought and oversold levels, one can use periods 10 periods.
- The default period used by stochastic stock trading oscillator indicator is 12.
Traders should not use stochastic stock indicator alone for making stock trading decisions, but should use this Stochastic oscillator stock indicator in combination with other stock technical indicators.
In ranging stock markets this Stochastic oscillator stock indicator can be used to show oversold/overbought levels as potential profit taking points when trading the stocks trading market.
Oversold and overbought stock trading levels by default are 20 and 80, but other stock traders use 30 and 70.
To look for "overbought" region at the indicator's 80% stochastic stock trading oscillator mark is used
To look for "oversold" region 20% stochastic stock trading oscillator mark is use.
The overbought and oversold levels are displayed as dotted horizontal lines on the stochastic oscillator stock indicator. These levels can also be adjusted to the 30 and 70 levels.
Overbought and Oversold Levels on Stochastic Oscillator Stocks Trading Indicator