Stochastic indicator is the basic indicator that signs the trend of market. It is often used to determine the trend of market and possible reversal points in Olymp Trade.
Set up Stochastic indicator in Olymp Trade
At Indicator tab, choose Stochastic.
The Stochastic indicator is created by 2 lines: %K line=14 (The blue line) and %D line=3 (The red line). Stochastic indicator is restricted from 0 to 100.
However, the stochastic line actually moves between two lines: the green line (the 20 line) and the red line (the 80 line). When the Stochastic indicator moves out of these 2 lines, it indicates that product is oversold or overbought.
How to use Stochastic indicator in Olymp Trade
Traders use Stochastic indicator as a sign for reversal and pay attention to these 2 situations:
Stochastic indicator often lies inside the overbought/oversold zone.
You should focus and open orders when Stochastic indicator lies in one of 2 zones: overbought zone (above the 80 line) and oversold zone(under the 20 line).
When Fast stochastic line (%K line) cuts Low stochastic line (%D line) from under the %D line, you can open an UP order with long time frame in Olymp Trade.
Similarly, when the %K line cuts the %D line from above the %D line, it is a sign that you can buy the DOWN with long time frame in Olymp Trade.
About Stochastic indicator divergence
When price increases but Stochastic indicator decreases, it is a sign that you should buy the UP. When price falls but stochastic indicator rises, it is a sign for buying the DOWN.
Divergence is the most reliable sign when you use Stochastic indicators to analyse the market. You can practise using this indicator by register Olymp Trade at here.
Wish you success!