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Stochastic Indicator

Stochastic Indicator

Mathematical algorithms, candlestick and chart patterns are an invariable basis for a competent analysis of charts in financial markets. Using technical analysis tools, traders predict price reversals or continuation. The Stochastic indicator belongs to the category of popular and simple technical tools; it can act as the basis of a trading strategy or act as a signal filter. Forecasting the market using Stochastic does not require special knowledge from a trader; the oscillator is successfully used by beginners and experienced traders.

The father of the stochastic indicator in financial markets is Dr. George C. Lane, Head of Investment Educators. The oscillator itself is considered to be an improvement and development of Larry Williams' ideas, unlike his oscillator, the Stochastic indicator does not react so sharply to price behavior, since it filters out price noise, which reduces the likelihood of false signals.

Like many great traders, George Lane became interested in stock trading by pure chance. Initially, he was going to become a doctor, but his interest in trading captured so much that Lane acquired a place on the exchange and began trading. Later he developed the world famous oscillator.

Oscillator Stochastic is a technical tool for analyzing charts in financial markets, it is an indicator of demonstrating the position of a quote at the current moment relative to the price zone for a given period in the past. Stochastic Oscillator is used to predict a trend reversal, the main signal for the beginning of a trend change is the entry of two Moving Averages into the overbought zone beyond level 80 or oversold area below level 20, the signal is strengthened when the moving averages cross each other in signal zones.