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 three kinds of this stochastic oscillator indicator look at a certain time, like 10 days, and see how today's price compares to the highest and lowest prices during that time when figuring out the stochastic oscillator in trading.

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.

The Stochastic Oscillator indicates the strength of trends and identifies moments when a trade is oversold or overbought.

Fast Stochastics Indicator

Fast Stochastic 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 uses smoothed price information from the original calculation and is favored by many traders. This version of the slow stochastic stock indicator is less likely to have sudden, erratic movements compared to the fast stochastic oscillator version.

Concerning the slow stochastic indicator for stocks, a three-period moving average MA is utilized to smooth the lines of the stochastic indicator. This moving average relates not to price action but to the data derived from the stochastic oscillator trading lines.

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.

The full stochastic lets stock traders pick periods for fast and slow lines. It fits indices trading needs.

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3 Types of Stochastic Indicators