quotex trading stochastic method


QUOTEX TRADING STOCHASTIC METHOD is an indicator that can specifically measure the saturation area of a movement of buying and selling transactions on an asset, both Commodities, Stocks, and Currency.

What is the Stochastic Method ?

The Stochastic oscillator is one of the oldest indicators. It will help you catch the wave by conducting a comparison between the most recent closing price and the past high-low range over a specific time.

Two lines are forming the Stochastic oscillator. The first one is known as %K and the second one %D. Their range falls between 0 and 100. On the chart, however, you will observe two lines with 20 and 80 values. You will be able to identify the oversold and overbought zones with them.

The Stochastic is calculated according to the following formula :

  • %K = [(Close – Low N) / (High N – Low N)] / 100,
  • %D = simple moving average of %K in 3 periods.

The most recent closing price is called “Close” in the above formula.

Low N represents the lowest price that was observed over N periods.

High N is the highest price measured over the same interval.

The parameters of the indicator

When you choose an indicator from a list provided by IQ Option, it appears with the default settings. They are %K = 13, %D = 3, m = 3 bars. If this is not what you need for a financial instrument you have chosen or a specific strategy, you can decide to adjust them accordingly.

The %K period tells how many periods are taken into account when estimating the blue line of the indicator. It will be smoother when you increase the period. It will be the right option for traders who prefer long-term transactions. Those who would rather open short-term positions should set a smaller period. The line will bounce higher and produce trading signals more often. Nevertheless, some may turn out to be false.

The most commonly used periods for the %D line is between 3 and 9 bars. This value gives you information about how many periods are used for the %K simple moving average. The bounces are smaller when the period is set for higher values. When a small period is set, the effect may not be sufficient.

How to use the Stochastic oscillator on the Quotex Platform

The points of interest are the points when two lines of the Stochastic intersect. When it happens over the line with value 80, it gives the signal the uptrend comes to an end and the downtrend should soon begin. When the lines intersect below the line with value 20, that is in the oversold area, the uptrend is imminent.

So you can use the Stochastic to forecast the trend reversal. However, the signals can sometimes be not too precise. But the good news is that you can improve the accuracy by adding yet another Stochastic to your chart.

A trading method based on two Stochastic oscillators
To use a method I am describing today, you will have to add two Stochastic oscillators to your trading platform. One is usually called “Fast”, the second Stochastic is called “Slow”. Adjust the parameters of oscillators. The settings for the first one are 8, 3, 5. The settings for the second one are 17, 3, 7.

The first Stochastic, a fast one, will produce signals to open transactions. You will however not enter yet. You will watch the second Stochastic waiting for the confirmation of the entry points. This will save you from opening transactions too early.

Opening long transactions with the double Stochastic method on Quotex

Below you will find an exemplary chart for the EURUSD with 5-minute Japanese candlesticks. Two lines of the Fast Stochastic cross in the oversold zone. This gives you a signal the reversal of the trend is close. But you do not enter the transaction yet. Instead, you are watching the second Stochastic. Not long after, the lines of the Slow Stochastic also intersect. This is a confirmation you were waiting for. Now is a good time to open a long position. You can keep it for a duration of 4 candles that is around 15-20 minutes. If you are using 15-minute candles, keep it open for an hour. With longer periods, lengthen the time your position is open accordingly.

Opening short transactions with the double Stochastic method on Quotex

This time I was using the chart for the USDJPY currency pair with 5-minute period candles. Notice when the lines of the first Stochastic cross each other in the overbought area. You are, however, waiting for the Slow Stochastic. You enter a short trade when the lines of the second Stochastic also cross in the overbought zone. Adjust the duration of your trade to the timeframe of your chart. With 5-minute period candles, I opened a transaction for around 15-20 minutes. With a 15-minute chart, my trade could continue for 1 hour and with 1-hour candles for around 4 hours.


quotex trading stochastic method

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