What is the Stochastic – Veles Help Center

What is the Stochastic

Stochastic is an oscillator that detects the momentum of price. As a rule, the momentum changes direction before the price. It is plotted in the chart window and consists of two lines:

  • Fast %K
  • Slow %D

The behavior of the indicator is interpreted in two ways.

The first one is the crossing of K and D lines. When the K line crosses the D line from top to bottom, it is considered to be a signal to sell (short), when the K line crosses the D line from bottom to top, it is a signal to buy (long).

The second is the exit of both indicator lines from overbought / oversold zones. When both K and D lines cross the oversold boundary (20) from bottom to top, it is a buy signal (long), and when both K and D lines cross the overbought boundary from top to bottom, it is a sell signal (short).

In the Veles platform there are two types of Stochastics – fast and slow.

Fast for K calculations uses 5 periods and is more volatile.

Slow for K calculations uses 14 periods according to the formula of fast Stochastics, and is also smoothed by three periods of SMA.

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