What is Stochastic Oscillator and its Uses to Forex Trading
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The stochastic oscillator is an indicator that measures price's momentum and the strength of a trend. The stochastic oscillator was developed in the late 1950s by George Lane. Lane indicates that stochastic oscillator does not follow price or volume or anything similar but rather follows the speed or momentum of price. In this way, the stochastic oscillator can be used to foreshadow reversals when the indicator reveals bullish or bearish divergences. This signal is the first, and arguably the most important, trading signal Lane identified. Hence, it is called a Leading Indicator. One con about leading indicators is that they are prone to mistakes especially when market sentiment changes suddenly.
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The stochastic oscillator is an indicator that measures price's momentum and the strength of a trend. The stochastic oscillator was developed in the late 1950s by George Lane. Lane indicates that stochastic oscillator does not follow price or volume or anything similar but rather follows the speed or momentum of price. In this way, the stochastic oscillator can be used to foreshadow reversals when the indicator reveals bullish or bearish divergences. This signal is the first, and arguably the most important, trading signal Lane identified. Hence, it is called a Leading Indicator. One con about leading indicators is that they are prone to mistakes especially when market sentiment changes suddenly.
