Stochastic Oscillator

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Stochastic Oscillator

What is Stochastic Oscillator

A momentum indicator called the stochastic oscillator is used to choose whether to enter or quit a trade depending on whether the underlying financial instrument is overbought or oversold.

Dr. George Lane developed the idea of stochastics in the 1950s, which entailed contrasting the current price with a price range for a predetermined period of time. The stochastic oscillator shows where the closing price of a stock stands in relation to its high and low range over the previous (typically) 14 days. Lane asserts that the stochastic oscillator tracks the speed or momentum of the price rather than changing in response to changes in price, volume, or other variables.


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