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Stochastic Indicator Explained: Fast, Slow, & Full Stochastics / Oscillator Strategy Tutorial Basics - YouTube
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Stochastic Indicator Explained: Slow, Fast, & Full Stochastics. // Oscillator Strategy Tutorial Basics Trading david moadel
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welcome to looking at the markets with
David Modell today I wanted to discuss
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stochastics the stochastic indicator
also called this stochastic oscillator
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call whatever you want I think it's
pretty cool and I want to get in some
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details you know what is the fast
stochastic the slow of stochastic the
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full stochastic if you like that one
which one should you use which one do I
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like so let's take a look
alright I'm using stockcharts.com want
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to give them credit for their charts and
here is Apple the daily candlestick
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chart and you can use the stochastics
for not just the daily chart so you can
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date rate it using the 5-minute candles
or the two or one minute
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or whatever you could use the weekly
candles monthly for long term buy and
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hold whatever you like I'm just going to
use the daily candlestick chart of Apple
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for this example
alright so below it I put all three
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stochastic indicators and on
stockcharts.com it's easy to do you just
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go down to indicators and put them on
there the default parameters or settings
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will be the 14 period so it looks back
at the last 14 candlesticks so it's 14
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and 3 so what does that mean okay well
first let's look at the fast stochastics
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you got the fast the slow and the full
all right so the FASTA castex you see
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that black line there it's really jagged
really volatile kind of hard to follow
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alright it's a fast mover there I would
say the black line here it's not my
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favorite one it doesn't mean you can't
use it but I normally don't look at this
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one first because it is so jagged and it
moves so fast that's probably why they
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call it the fast Acastus alright and so
the black line is the 14 period look
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back fast stochastic indicator and if
you're wondering how they calculate that
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you don't need to know it
is the current clothes - the lowest low
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/ the highest high - the lowest low
times 100 in case you're curious about
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where they get these stochastic
indicator numbers from all right so now
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case you don't know already I'll just
give you a quick primer on that if it
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goes below 20 which is this horizontal
line here that means it's oversold what
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a lot of people like to do is wait until
it goes below the oversold line here at
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20 and then when it pops up back above
it that could be a buy signal alright
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and then overbought or to expensive
would be this horizontal top line here
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and some people say that when it goes
above 80 which is the top line here that
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it's oversold and so some people like to
wait until it goes above and then breaks
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below the oversold line here or 80 and
then they either sell their stock or or
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whatever cryptocurrency currency
commodity whatever it is and then they
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either sell it or they might even short
it okay so that's just one way to use it
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but you have to make your own judgment
of course as to what to buy and what to
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sell so that's the fastest ik and I told
you how they calculate it so what's this
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red line well that is simply the three
day simple moving average of the black
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line this you see the three there okay
that's it's a three day moving average
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simple moving average of the fast
stochastic here so it smoothes it out a
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lot of people like the red line better
than the black line and by the way since
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there are two lines here you can use the
crossovers as well for buy and sell
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signals some people think it's well some
people would say it's bullish all right
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when the faster line the black line goes
above it's moving average all right and
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then some people would say it's bearish
when it goes below it's moving average
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when the black line goes below the red
line
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that's another interpretation of it all
right so that's the fast stochastics
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it's volatile and it may not be your
favorite one but it certainly can be
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used I tend to prefer these slow stew
Plastics that's just my preference it
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doesn't give you as many signals alright
it's not going to drop below or above
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the line you know the over sold and
overbought liens is often but that way
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you don't get chopped out with chopped
up with Commission's you don't get as
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many false signals it's just easier to
read it's not as jagged not as volatile
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all right now you notice that the black
line here which is the slow stochastic
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14 period once again notice that the
black line here looks a lot like the red
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line here ah because it's the same thing
okay they just take the three day moving
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average of the FASTA cast ik the red
line and they put it down here for the
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black line notice they're exactly the
same the red line here and the black
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line here so that's why it's the slow
stochastic it's really just the moving
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average of this one the FASTA cast ik
and so it doesn't move as fast and then
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they add a three day simple moving
average of this line which is itself the
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three day moving average of this line so
this red line here is the three day
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moving average of the three day moving
average that's crazy right but it kind
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of makes sense so what we have here is
we can look at the black line the 14
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period slow stochastic which is a three
day moving average of the FASTA cast ik
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alright and again you could use it in
the same way you could either wait until
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it goes below the 20 line here and then
pops up back above it as a buy signal or
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you can wait until it goes above the 80
line here and then goes back below as a
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sell or short signal that's one possible
way to use it you can use the crossovers
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again when the faster one the black line
goes above the slower one the red line
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that could be a buy signal when it goes
below the red line it could be a sell
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signal multiple ways to use it alright
so once again the red line here the
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three day moving average of the black
line here that's the black line is the
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slow stochastic alright and then finally
the full stochastics stockcharts.com has
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it not every platform has it you notice
it looks exactly like the slow
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stochastics all it is really is just a
more customizable one so for example on
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the FASTA cast ik
in addition to changing the look-back
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period the 14 you can also change the
moving average you can make it the three
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day or you could change the three to
five day eight day one day two day
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whatever okay
same with slows to slow stochastics you
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can change the look-back period from
fourteen to something else and you can
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change the moving average look-back
period from three to whatever alright
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for the full stochastics you can change
everything
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so the 14-day look-back period you can
change that you could change the three
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which is like this three and you could
change the other three which is like
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this three alright so you can change all
the look-back periods for the fourteen
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day and then the three simple moving
average and then the other three simple
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moving average you can change them all
you can customize it for me I tended C
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to stick just with the slow ones on the
standard settings that's the easiest way
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but I like the fact that with this
indicator no matter what platform you're
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using you can change all the parameters
or at least you should be able to you
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can change all the settings from the
default all right so that's a quick
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rundown of the fast slow and full
stochastics so I hope you found this
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useful and helpful if you did please
give this video a thumbs up on YouTube
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and leave a comment and subscribe to my
youtube channel go ahead and do that if
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you haven't done it already if you want
more help with indicators trading
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investing putting together a plan
because you need to have a plan if you
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don't have a plan for your trading or
and your your investing if you don't
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have a plan then you're not going to do
well so you can email me at any time my
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email address is David Modell at
gmail.com and also if you happen to see
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ahead and please click on those give
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it
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alright thanks a lot I really appreciate
it and I'll talk to you again soon
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