For dealing with binary options, stochastics are very suitable. This is a sub-area of mathematics dealing with statistics and the probability theory (translation stochastics: “rate art”).
The American trader named plus500 George C. Lane developed “fast and slow stochastics” based on this in the 1960s. This indicator falls into the category of so-called overbought / oversold indicators. This method is based on the observation that when prices move upwards, prices are close to the daily high, and vice versa, prices fall down when prices are close to the lowest of the day.
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Working with the stochastic indicator 24option
The stochastics indicator can also be named as a IQ Option pulse oscillator, which has two lines and oscillates between 0 to 100 (oscillates). In light trends as well as in sideways movements, this indicator can indicate corresponding reversal points. In the case of strongly marked trends, this indicator is generally not used in the analysis. Moreover, deviations between the indicator price and the price of an underlying value indicate changes in the trend.
In doing so, the indicator calculates the closing price of an underlying instrument as a function of the total course length within a specific fixed time interval, or a percentage is calculated for the probability that the price will continue in the same direction of the previous day’s course. If the price is up or down, the closing price is close to the highest or lowest of the previous day.
A distinction is made between stochastics over 80 per cent (surpassed values) Social Trading and stochastics below 20 per cent (overpriced values). The stochastic indicator Copy Trading is taken from the line
and the line
- % D = Moving average of the last three days or% K values
, which again move between the values 0 and 100, as mentioned above. In addition,% D is a moving average of% K. The fast stochastics indicator is supplemented by the slow stochastic indicator. The basis is the% D line, whereupon a moving average is calculated.
The fast stochastics are smoothed by the slow stochastics and thus soothe the oscillator (% Kslow equals% Dfast). The% D line is calculated from% Dt minus 1 times 2 plus% Kslow by 3.
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For the settings in the analysis programs, 5% K periods and 3% D values are mostly selected for smoothing. Most traders use slow and fast stochastics alike, although slow stochastics are usually sufficient.
It takes some experience to deal with the stochastic indicator. However, the following methods may be helpful in determining the stochastic indicator:
- Crossover: The% K and% D lines are considered as moving averages, one line is fast and the other line is slow. etoro From time to time there is a “crossover”. A sales signal is generated when the% K line crosses the% D line (“Up”). Similarly, there is a sell signal when the% K line crosses the% D line (“Down”).
- Overbought / Oversold: If the% K or% D line exceeds the 20- and 80-percent mark, their more info there was an overbought / oversold market mood. If the indicator falls below the 20 percent mark and then exceeds it again. Conversely, it is sold when the indicator exceeds the 80 percent mark and then drops below it.
- Divergences : Exists