3 Types of Stochastic Technical Indicators

Fast, Slow and Full Stochastic

There are three types of Stochastic Oscillator: fast, slow and full stochastic oscillator indicator.

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

Stochastic oscillator technical indicator works based on the principle that:

During an upward gold trend, price action tends to close at the high of the candlestick.
During a downward gold trend, price action tends to close at the low of the candlestick.

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

Fast Stochastic Oscillator Technical

Fast Stochastic Oscillator Technical - fast stochastic oscillator trading draws 2 lines, one solid and one dotted on the technical indicator section. These two lines are called the %K line and %D line. In this versions the %K & %D lines are calculated differently from the other editions, so that to add extra smoothing.

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

Slow Stochastic Oscillator

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 indicator version is less prone to fake outs compared to the fast stochastic version.

For the slow stochastic technical indicator. A three period moving average is used to smooth out the stochastic lines. The moving average is not that of the price action but of the stochastic oscillator lines data.

Full Stochastic Oscillator Technical

Full Stochastic Oscillator Technical Indicator - this stochastic oscillator does not use a fixed MA period, like the slow gold trading stochastic oscillator version above. Traders don’t want to use a fixed setting to calculate the stochastic technical indicator.

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

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

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3 Types of Stochastic Technical Indicators