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# Fast Stochastic Oscillator (Fast STO)

The **Stochastic Oscillator** was developed by the president of Investment Educators, Inc., (Watseka, IL) George Lane. The main notion of Fast STO is that when prices decrease, closing prices tend to be nearer to the lower end of the range. In uptrends, the closing price moves towards the upper border of the range.

The **Stochastic Oscillator** consists of 2 lines - %K line and %D line that fluctuate between 0 and 100 on a vertical scale. The %K that is the main of two is depicted as a continued and unbroken line. The %D line is a moving average of %K. and is depicted as a dotted line. The Fast Stochastic is the average of the last three %K and a Slow Stochastic is a 3-day average of the Fast Stochastic. Use as a purchase/sell signal generator, purchasing when fast moves are higher than slow and selling when fast moves are under slow.

The majority of dealers use the Slow Stochastic Oscillator because it provides signals that are more trustworthy. There are 3 variants of acting after getting the Fast Stochastic Oscillator results:

- Purchase when the %K line moves over the %D line and sell when the %K line becomes less than the %D line.
- Sell when the Oscillator moves over the point of 80 and then moves below that level. Make a purchase when the Oscillator (%K or %D) moves under the point of 20 and then rises back above that level.
- Find distinctions in prices moving to a series of new peaks because the Stochastic Oscillator cannot exceed the previous peaks.