He belonged to a group of elite traders in chicago s investment arena but the invention of the stochastic oscillator was solely. The stochastic oscillator was invented by a chicago based securities trader and renowned technical analyst george c. The stochastic momentum indicator is one of the most popular technical analysis indicators used by forex traders.
This indicator ranges between 0 and 1 which is then plotted as a line. In short stochastic rsi indicator is an indicator of an indicator. Stochastic oscillator with rsi the use of stochastic rsi in technical analysis is to provide a stochastic calculation to the relative strength index rsi.
The success of the best stochastic trading strategy is derived from knowing to read a technical indicator correctly and at the same time make use of the price action as well. Day trading with the best stochastic trading strategy is the perfect combination between how to correctly use stochastic indicator and price action. This indicator measures momentum by comparing closing price to the.
The stochastic oscillator is a momentum indicator that is widely used in forex trading to pinpoint potential trend reversals. Keep in mind that stochastic can remain above 80 or below 20 for long periods of time so just because the indicator says overbought doesn t mean you should blindly sell. Many forex traders use the stochastic in different ways but the main purpose of the indicator is to show us where the market conditions could be possibly overbought or oversold.
That is the basics of the stochastic.
