3 Types of Stochastic Indicators

Fast, Slow & Full Stochastic

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

All the three versions of this stochastic oscillator 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 indicates the power 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 much differently from other versions, so that to add smoothing out.

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 & over-sold levels. The fast stochastic oscillator lines are prone to fake signals/whipsaws.

Slow Stochastic Oscillator

Slow Stochastic Oscillator - slow stochastic oscillator 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 oscillator version.

For the slow stochastic indicator. A three period moving average is used to smooth out the stochastic oscillator 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 Indicator - this stochastic oscillator doesn't use a fixed MA(Moving Average) period, like the slow gold trading stochastic oscillator version above. Traders do not want to use a fixed setting to calculate the stochastic indicator.

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

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

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3 Types of Stochastic Indicators