The Stochastic Indicator is the brother of the RSI or Relative Strength Index indicator. Don’t believe me, read this article.
Now, if you have understood the concept of the Relative Strength Index from above. I bet you will understand the concept of Stochastic Indicators in minutes. Both these indicators are considered soulmates of each other and are even used by traders together. In this article, I will also teach you how to use the Stochastic and Relative Strength Index indicators together but before let’s discuss the basics of the Stochastic indicator.
About Stochastic Indicator
A Stochastic Indicator or you can call it a Stochastic Oscillator is a trend indicator that was developed by George Lane. This indicator uses two moving average that oscillates between 0 – 100. In most trading platforms you will find 20 – 80 as that’s the best way to trade with this indicator.
This indicator uses two moving average lines name % K and % D. The % K line is considered as the fast line whereas the %D line is considered the slow one. The intersection of these two lines generates buy and sell signals and helps traders to predict the upcoming bullish and bearish trend.
How to set Stochastic Indicator on the Quotex trading platform
To set the Stochastic Indicator on Quotex trading platform follow the steps given below. Firstly, create a Quotex account. In case, you don’t have one click here.
Once, you signed up. you will land on the trading dashboard. click on the indicator button and search for Stochastic Indicator from the list.
Click the name and configure the indicator based on your preferences. and once you done click apply.
How to Trade?
Trading with the Stochastic Oscillator is very easy. you just need to remember the trading rule of this indicator.
=> When the green line ( % k line ) intersects the red line (%D) from the bottom it signals an upcoming bullish trend. and here, we can place a buy trade.
=> Similarly, when the red line ( % D line ) intersects the green line ( %K line ) from the top it signals an upcoming bearish trend. and here, we can place sell trade.
Stochastic with RSI ( Relative Strength Index )
Trading with the combination of Stochastic and RSI is equally easy. Just remember the following rule :-
=> When you have identified the bullish trend with the Stochastic Indicator.
Now you need to confirm the trend with RSI. If RSI line is also below 30 it confirms a strong bullish trend.
=> And when you need to identify the bearish trend with the Stochastic Indicator.
Now you need to confirm the trend with Relative Strength Index. Next if the RSI line is above the 30 it confirms a strong bearish trend.
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