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Stochastic Oscillator Settings for Forex Trading


Stochastic Oscillator Settings is 5, 3, 3 by default on MT4 platform. It seems that is the best settings for this indicator. However, some Forex traders like to try the faster and slower settings. The larger the numbers, the slower the indicator, and visa versa. By “slower” I mean the price will be more ahead of the indicator and the indicator will be slower and more delayed.

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Traditional Stochastic Oscillator has two lines. But the second line is removed on MT4 because it is not necessary. Indeed, those who were used to buy when Stochastic Oscillator moved up from the oversold area, and sell when Stochastic Oscillator moved down from the overbought area, used the second line a lot. But now it is proven that trading the Stochastic Oscillator like that was one of the most important causes of losing in so many positions.

As I have explained in details in this article, you should always ignore Stochastic Oscillator when it is moving between the 80 an 20 levels: How to Read Stochastic Oscillator Properly

Therefore, we don’t need the second line also. Just the main line is enough. We consider Stochastic Oscillator when it is in the overbought or oversold areas and we ignore it when it is moving between the 20 and 80 levels. This method eliminates a lot of noise and false signals. Also prevents us from entering the the slow and sideways markets.

So… What Is the Best Stochastic Oscillator Settings?

Experience has proven that the Stochastic Oscillator default settings on MT4, which is 5, 3, 3 is good enough. But some slower settings like 10, 3, 3 look almost the same as 5, 3, 3 and sometimes even better. However, super slow settings like 20, 3, 3, makes Stochastic Oscillator completely useless.

On the below chart, I have EUR/GBP monthly chart with three Stochastic Oscillator settings. The top one is with the Stochastic Oscillator default settings which is 5, 3, 3. The middle one is twice slower than the top one: 10, 3, 3. The lower one is 20, 3, 3.

As you see, the top and the middle Stochastic Oscillators look almost the same and they are able to confirm the support and resistance breakouts on the price chart. If you don’t know how we use Stochastic Oscillator to confirm the price actions like support/resistance breakouts, please read the below articles:

  1. Stochastic Oscillator: A Mechanical Indicator for All Traders
  2. The Safest Way to Use Stochastic Oscillator
  3. How to Read Stochastic Oscillator Properly

It is interesting to see that sometimes the 10, 3, 3 Stochastic Oscillator goes above the 80 and below the 20 levels, faster than 5, 3, 3.

So according to the below chart and also several other charts that I checked, the default Stochastic Oscillator settings which is 5, 3, 3 and also the slower settings which is 10, 3, 3 are both OK to confirm the price actions like support and resistance breakouts. While the 20, 3, 3 Stochastic Oscillator could cause us to miss two of the breakouts, the 5, 3, 3 and 10, 3, 3 confirmed all the breakouts on time and without delay. Even 10, 3, 3 worked better than 5, 3, 3 settings. It is interesting.

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Stochastic Oscillator Settings

Now let’s experience another thing:

In the above chart, just the %K period is changed to 10 and 20 in the middle and lower indicators. However, in the below chart, I also “slowered” the %D period and Slowing. It means the middle Stochastic Oscillator settings is 10, 6, 6 and the lower one is 20, 12, 12.

As you see below, the middle and lower Stochastic Oscillators have become completely useless and are unable to confirm any of the support and resistance breakouts:

Stochastic Oscillator Much Slower Settings

So, what is the best Stochastic Oscillator settings?

It seems the 10, 3, 3 has won the contest and looks the best. However, 5, 3, 3 which is the Stochastic Oscillator default settings on MT4, is also good.

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Chris Pottorff

"Whether you think you can, or you think you cannot, you are right." - Henry Ford

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One thought on “Stochastic Oscillator Settings for Forex Trading
  1. TS says:

    how about 14,3,3? which is better from the this and the one mentioned in article?

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