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2. How to use the Forex Stochastic Oscillator

Metatrader 4 Tip 2 – How to use the Forex Stochastic Oscillator

 

On the last tip we saw How to Add an Indicator to a Graph on Metatrader 4.  Today, we will focus on the use of the Forex Indicator Stochastic-Oscillator on MT4.

The Technical Analysis Indicator for Forex Market, STOCHASTIC, belongs to the OSCILLATORS classification and allows us to identify purchase and sales chances when we face market channel behavior. 

On this graph, we see 4 possible incomes (tagged in yellow). In the EURUSD pair, entry points  are given when the Stochastic Indicator crosses from above the 75 level or below the 25 level.

When the Forex Stochastic indicator is between the levels of 75 to 1, we say that the pair is an Over Bought and we will look for short positions.

When the Forex Stochastic is below the levels of 0 to 25, we say that the pair is in an Over Sold and we will look for long positions.

Forex Stochastic Indicator

It’s always important to confirm the given signal by the Forex Stochastic Indicator with other indicators like, for instance, with a 5-period MA (in red).

RISK WARNING: Trading in Forex and Contracts for Difference (CFDs), which are leveraged products, is highly speculative and involves substantial risk of loss. It is possible to lose more than the initial capital invested. Therefore, Forex and CFDs may not be suitable for all investors. Only invest with money you can afford to lose. So please ensure that you fully understand the risks involved. Seek independent advice if necessary.