Stochastic Oscillator and Components
Stochastic Oscillator is a momentum indicator that is used by traders worldwide to identify crucial price movements of a security. This indicator was developed by George C. Lane in the 1950’s.
Using the Indicator you can easily identify the potential price movement of the security. Talking about the components of the indicator, the indicator is made from two moving average lines %K and %D.
%K is the main line that represents the current closing price of a security with a default period of 14. It is calculated using a simple mathematical formula
%K = [ (Current Price – Lowest Price in 14 periods) / (Highest Price – Lowest Price in 14 periods)
Similarly, the % D line is another component of the Stochastic Oscillator with a default period of 3. It is used to smooth out the %K line and increase the efficiency of the same.
How to set up a Stochastic Oscillator on the Pocket Option?
You can easily start using a Stochastic Oscillator on the Pocket Option trading platform. The only thing you need to do is sign up using this link and you will get access to hundreds of indicators and tools including Stochastic Oscillator.
Once you have signed up you will get access to the Pocket Option trading dashboard. Now, Click on the indicator button represented using three lines parallel to each other at the top of the page. Next, find the name and click the Stochastic Oscillator from the menu.
How to place trades with Stochastic Oscillator on the Pocket Option?
In order to place trades with Stochastic Oscillator you need to first identify the buying and selling opportunities.
Firstly, make sure the Stochastic Oscillator is visible on your trading chart. Next, select the type of moving average or make the necessary amendments you desire.
Pocket Option is a very good platform and I guess is the only platform where you adjust the moving average line using the Stochastic Oscillator.
According to me, WMA is the best moving average line in my experience So, I am gonna go with the WMA Indicator and I will also change the indicator line colour for better visibility.
So, Everything is set and now the indicator is ready to use. You can use the indicator to find the best trading opportunities.
When the green line (%D) line above intersects the red line (%K) it signals the entry of the new buying force and you can opportunity to place a buy trade.
Similarly, When the green line (%D) line intersects below the red line (% K) it signals the entry of the new selling force and you can opportunity to place a sell trade.