Stochastic Oscillator Trading Strategy

Key Takeaways

• 1Stochastic compares close to range (0-100); >80 = overbought, <20 = oversold.
• 2%K (fast line) crosses %D (slow line) upward = buy signal; downward = sell signal.
• 3Best in ranging markets; gets many false signals in strong trends.
• 4Enter on %K/%D cross + price at support/resistance for higher probability.
• 5Settings: 14,3,3 (standard), 5,3,3 (faster), 21,5,5 (slower for swing trading).
• 6Combine with trendlines or moving averages to filter low-conviction signals.