The Stochastic Oscillator is a very popular indicator amongst traders. In this article we explain what it is and how to use and how the Stochastic Multi Time Frame Indicator For Metatrader can help your trading.
What Is The Stochastic Oscillator
The Stochastic Oscillator is a momentum indicator.
Traders have been using the Stochastic for over 50 years and even so, it is still very popular.
Being a momentum indicator, the Stochastic is useful to understand if a move is exhausting.
The Stochastic is the result of the comparison of the price over a specific period of time.
The value of the indicator fluctuates between 0 and 100.
The Stochastic Indicator graph includes two lines:
- MAIN LINE, which is the value of the indicator calculate with the following formula
- SIGNAL LINE, which is the moving average of the main line on a specified period, helps smoothing the changes
Formula Of The Stochastic Oscillator
The mathematical formula for the stochastic oscillator is
%K = ( ( C – LX ) / ( HX – LX ) ) x 100
- C is the close price
- LX is the lowest price in the previous X candles
- HX is the highest price in the previous X candles
- %K is the value of the stochastic
You can find this formula here.
How To Use The Stochastic Oscillator
As we mentioned before the Stochastic value is ranging between 0 and 100.
We also said that the Stochastic includes a MAIN and a SIGNAL line.
When studying this indicator you usually consdider:
- A stochastic above 80 means that the price is overbought, so it will probably retrace or consolidate
- A stochastic below 20 means that the price is oversold, so it will probably rise or consolidate
- When the MAIN crosses the SIGNAL, upwards or downwards, probably there is a change in the trend
While these are common behaviours, the oscillator has also exceptions.
In fact, not always a cross means that the price will change direction.
Also, in case of a strong trend the stochastic can remain in overbought or oversold area for an extended period of time.
Stochastic Oscillator Indicator For Metatrader
Metatrader includes the Stochastic Oscillator Indicator by default.
The indicator is available in the Oscillators section.
Since there is no alert options I created an enhanced version of the indicator so that you can receive notifications when the price is oversold or overbought and when there is a cross in the main and signal lines.
Stochastic Multi Time Frame Indicator For Metatrader
When you do technical analysis it is sometimes easy to forget to check the “bigger picture”.
Often we focus on a specific chart and time frame and we do not consider what is happening on a larger scale.
This can be also when we check the stochastic indicator.
We might be checking the value on a M30 chart and this looks oversold. However, checking the same on a H4 chart this is perhaps in overbought area.
To improve this I created the Stochastic Multi Time Frame Indicator for Metatrader.
This indicator makes it easy to have a view of the Stochastic Oscillator in all the selected Time Frames.
You can see in a small table the value of the MAIN line and its recent trend in the same chart.
How To Use Stochastic Multi Time Frame For Metatrader
The Stochastic Multi Time Frame Indicator For Metatrader can show you if the stochastic is currently in an overbought or oversold area in all the time frames.
At the same time the indicator can show you the trend of the line, if it is higher or lower than the previous.
Furthermore, you can also see if the main line crossed the signal line recently.
The indicator includes the following features:
- Alert when all the time frames are in the same area
- Notification if there is a change in the status, going overbought, oversold or back in range
- Selection of the time frames, you can decide to include or ignore specific time frames
- Notifications to Mobile, Email and On Screen
Download Stochastic Multi Time Frame For Metatrader
You can try the indicator on AUDNZD with the Demo version or get the full version.
Even if the Stochastic oscillator is over 50 years old it is still very popular.
It is a momentum indicator that can help a trader spotting overbought and oversold situations and act accordingly.
The Stochastic Multi Time Frame Indicator for Metatrader allows you to see the status of the oscillator in all of the time frames. In this way you can have a better understanding of the overall situation.
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