Best Stochastic Forex Trading Strategy|How to Use Stochastics: An Accurate Buy and Sell Indicator

Best Stochastic Forex Trading Strategy|How to Use Stochastics: An Accurate Buy and Sell Indicator
Effective Use of Stochastic Oscillator Explained
The Stochastic Oscillator offers Forex traders three different types of signals
Overbought and Oversold
Stochastic Crossover
Stochastic Divergence
Depending on the market conditions, these three signals can be interpreted differently. Therefore, it is imperative that you learn to identify the market condition before trying to interpret the Stochastic Oscillator signals.
Identifying Overbought and Oversold Market Conditions with Stochastic Oscillator
Often the most used Stochastic Oscillator signal is the overbought and oversold market conditions. As we discussed earlier, the Stochastic Oscillator is plotted on a fixed scale, and its value stays within 0 and 100.
When the Stochastic Oscillator value goes above the reading of 80, it is considered to be an overbought market condition, which signals that if you already have a long position, you should start reducing your position size or actively look for opportunities to sell the underlying asset.
By contrast, when the Stochastic Oscillator value goes below the reading of 20, it is considered to be an oversold market condition, which signals that if you already have a short position, you should start reducing your position size or actively look for opportunities to buy the underlying asset.
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