How to Use the Stochastic Oscillator

Use the stochastic indicator in these key ways:

• Overbought and Oversold in Range Markets: Buy when the D-line rises above 20 from oversold territory. Sell when the D-line falls below 80 from overbought levels.
• Line Crossovers in Range Markets: Buy when the K-line crosses above the D-line. Sell when the K-line crosses below the D-line.
• Trending Market Use: In an uptrend, wait for a retracement and oversold reading; buy when the D-line climbs above 20.

In a downtrend, wait for a retracement and oan verbought reading; sell when the D-line drops below 80.

Always trade with the trend: focus on buying in uptrends and selling in downtrends to improve success.

Summary

The stochastic oscillator is a versatile momentum indicator for identifying overbought and oversold conditions in both range-bound and trending markets. Combining line crossovers with trend direction ensures more accurate entries and exits.

Apply the stochastic confidently with PROP365 — your platform for effective, trend-aligned forex trading. Take your trading to the next level now.