Stochastic indicator (Stochastic) is Technical analysis tool, trade indicator. Stochastic indicator is represented by two lines: fast (%K) and slow (D%). Also on the oscillator chart there are 20% and 80% control lines to determine the overbought and oversold zones. It is preferable to use this indicator at the sideways movement of the price, when volatility market is significantly reduced.
How to use the stochastic?
The signal to sell, according to the indicator Stochastic is the crossing of any of the lines of the level of 80% from bottom to top, and then from top to bottom. You can make a buy transaction upon crossing the 20% level line from the top downwards and then from the bottom upwards. To open a position, you can also use crossing of the lines %K and D%. The signal for buying will be crossing by the line %K of line D% from bottom to top.
Stochastic divergence is best used for closing positions. Like any other technical indicator, Stochastic is used in conjunction with other analysis tools.