Question: What is the Stochastic Indicator?

Question: What is the Stochastic Indicator?

Answer

The Stochastic is used to measure market momentum. It is calculated using the difference between the 34 and 5 period simple moving average. Unlike most indicators, the simple moving averages used are not calculated from the closing or opening prices, but rather from the midpoint of the bar. The Stochastic Oscillator is most often used as a confirmation indicator or to anticipate potential reversals.