Place high quality trades with Stochastic Oscillator on Deriv

Stochastic Oscillator or call it Stochastic Indicator is a popular trend indicator developed by Dr George Lane in the 1950s. In this article, we will together see how this indicator works and how you can use this indicator to get high-quality signals on Deriv Trading platform.

What is a Stochastic Oscillator?

A Stochastic Oscillator is a momentum indicator via which you can predict the market movements of security prices. This indicator compares the security closing price to its price range over a specific period. The main components of the indicator are two moving averages lines name %K and %D that oscillates around line 0 -100. when these two lines oscillate near line 20 it signals that the market is currently bearish in technical terms we can say that the market is currently at an oversold level conversely, when these two lines oscillate near line 80 it signals that the market is currently bullish in technical terms we can say that the market is currently at the overbought level.

Unboxing Stochastic Oscillator

 

When you unbox the indicator you will see the important components of the indicator. As you can see given above is the fast line and slow line. Here, the fast line is %D with 3 periods and %K with 14 periods.

Buy with Oversold Level

 

 

When the %K and %D lines intersect each other below line 20 it signals an upcoming bullish trend and here, you can place a buy trade.

As, you can see given above is the 10-minute chart of AUD / JPY.  and we can clearly the moving average line below line 20. It signals an upcoming bullish trend and here we can place a buy trade.

 

Sell with Overbought Level

 

 

Conversely, When the %K and %D lines intersect each other above line 80 it signals an upcoming bearish trend and here, you can place a sell trade.

As you can see given above is the 10-minute chart of AUD / JPY.  and we can clearly the moving average line above line 80. It signals an upcoming bearish trend and here we can place a sell trade.