So far, we have learned the basic of Stochastic Oscillator (which includes the formulas) as well as the Stochastic’s buy signal, sell signal, overbought signal, and oversold signal. This knowledge is surely more than enough to finally make money in stocks with Stochastic. However, since the knowledge is purely theoretical, it would be better if there is the practical tips. Yeah, it would be great if there is a real example how exactly we can utilize the Stochastic in real stocks trading so we can make money in stocks.
After learned what the Stochastic is as well as learned how Stochastic is created, and now, let’s learn how to utilize Stochastic Oscillator as stocks trading/investing tool. As I have mentioned in the previous article, Stochastic Oscillator offers four of the very useful signals which are buy signal, sell signal, overbought signal, and oversold signal. These signals are produced by using the four available lines which are Fast Line (%K), Smoothed Line (%D), 20 Line, and 80 Line.
Let’s discuss about another technical analysis, the stochastic. As you may be already aware, It is well known that stocks trader/investor always try to find the “holy grail technical analysis indicator” which is an indicator that can tell when to buy and sell the stocks with 100% accuracy. However, as far as I know, there is no such indicator so it is useless to try to find it. Therefore, it is better to utilize the available indicators instead to do the useless effort to find the “holy grail indicator. Also that, we still can try to improve the certainty by combining two or more of the available indicators so our gain will be optimum.