What is MT4 Stochastic Oscillator?
Stochastic Oscillator (simply referred to as Stochastics) is an oscillator indicator, and because it is an oscillator, it consists of a scale of 100 points. It shows you when the market is oversold or overbought, helping you find good entry and exist points.
How can I add Stochastic Oscillator to my Forex trading platform?
Insert > Indicators > Oscillators > Stochastic Oscillator
How can I trade with Stochastic Oscillator?
To buy with Stochastics
To buy with Stochastics you should be looking for these circumstances to occur:
- The market has to be in an uptrend, and having a pullback (short bearish movement).
- Stochastics crosses below 20.
- K line crosses above D line.
- A candlestick closing in bullish style.
In that case, your initial stop should be a few pips below the last low.
Check the example in this picture:
To sell with Stochastics:
To sell with stochastics, you need to wait for the following circumstances to occur:
- The market is in a downtrend and it takes a short pullback (a short bullish movement).
- Stochastics crosses above 80.
- The K line crosses below the D line.
- Wait for the candlestick to close in a confirmation bearish style.
You can place your stop at the latest high level.
Check the example in the following picture: