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Trading with Oscillators

Oscillators are technical analysis indicators that are bound within a predefined range. This range in general defines if a market or a financial asset is trading in overbought or oversold levels. In contradiction with other indicators, oscillators are presented below the chart area and not within the main price chart area.

Here are the most commonly used oscillators:

  1. Rate of Change (ROC)

  2. Relative Strength Index (RSI)

  3. %R Williams (%R)

  4. Stochastic Oscillator

  5. Momentum Oscillator

  6. Moving Average Convergence Divergence (MACD)

  7. Awesome Oscillator (AO)

  8. DeMarker Indicator

  9. Directional Movement System (DMS)

  10. Gator Oscillator (GO)
  11. Commodity Channel Index (CCI)

 

MT4 Trade Signals Generator

 

(1) Rate of Change (ROC)

◙ Utility: Identifying the Trend

◙ Standard Settings: 21, 63, 125, 250 Periods

The rate of change consist the simplest form of a technical analysis oscillator and can be also usually found as momentum.

The Trading Year Breakout

There are 250 trading days in a single year or 125 trading days per half year. There are trading 63 days per quarter and 21 trading days per month. In general, a trend reversal commences when the shortest timeframe spreads gradually to the other timeframes.

» Rate of Change (ROC)

(2) Relative Strength Index (RSI)

◙ Utility: Identifying Overbought / Oversold Market Levels

◙ Standard Settings: 14 Periods

The Relative Strength Index or RSI is a momentum oscillator that is able to measure the velocity and magnitude of each directional price movements.

» Relative Strength Index (RSI)

(3) %R Larry Williams

◙ Utility: Identifying Overbought / Oversold Market Levels

◙ Standard Settings: 14 Periods

Williams % R is another momentum oscillator as in the case of RSI. Williams % R is widely used for its ability to identify overbought and oversold market levels.

» Williams %R

(4) Stochastic Oscillator

◙ Utility: Evaluating the Trend

◙ Standard Settings: 14 Periods (14,3,3)

The Stochastic Oscillator is a momentum indicator developed by George Lane. The Stochastic Oscillator can measure the momentum and the speed of a price.

» More on Stochastic

(5) Momentum Oscillator

◙ Utility: Identifying the Trend

◙ Standard Settings: 21, 63, 125, 250 Periods

The Momentum oscillator measures the difference between last price and the price of T periods ago.

» Momentum

(6) Moving Average Convergence Divergence (MACD)

◙ Utility: Evaluating the Trend / Providing Trading Signals

◙ Standard Settings: 12 periods Fast, 26 periods Slow and 9 periods SMA (12,26,9)

The Moving Average Convergence Divergence or MACD is able to identify the strength of any trend and to provide buy and sell trading signals.

» More on MACD

(7) Awesome Oscillator (AO)

◙ Utility: Identifying Momentum

◙ Standard Settings: 5 and 34 Periods SMAs

The Awesome Oscillator is an indicator that uses two Simple Moving Average of median prices.

» More on Awesome

(8) DeMarker Indicator

◙ Utility: Evaluating the Trend / Determines Timing

◙ Standard Settings: 14 Periods

The Demarker indicator is able to evaluate areas of likely price trend formation or price exhaustion prior to their occurrence. The DeMark Indicator is not focusing solely on market direction but also in the perfect timing.

» More on DeMarker

 

(9) Directional Movement System (DMS)

◙ Utility: Evaluating the Trend

◙ Standard Settings: 14 Periods

The Directional Movement System first evaluates if a market is trending or ranging and then provides the framework of generating trading signals.

» DMS System

(10) Gator Oscillator (GO)

◙ Utility: Identifying Strong Directional Action

◙ Standard Settings: 13 Periods (13,8,5)

The Gator Oscillator is based on the Alligator Oscillator which was developed by Bill Williams. The bars found above zero represent the absolute difference between the long-term moving average and the medium-term moving average. The bars below the zero represent the absolute difference between the medium-term moving average and the short-term moving average.

» Gator Oscillator

(11) Commodity Channel Index (CCI)

◙ Utility: Evaluating Overbought / Oversold Market Levels

◙ Standard Settings: 20 Periods

The Commodity Channel Index or CCI is able to measure the current position of a financial asset with respect to its moving average.

» More on CCI

 

(12) StochRSI

◙ Utility: Evaluating Overbought / Oversold Market Levels

◙ Standard Settings: 14 Periods

StochRSI is an oscillator based on RSI, created by Tushar Chande and Stanley Kroll. Actually StochRSI ‘is an indicator of an indicator’. StochRSI aims to increase the sensitivity of RSI readings and generate more trading signals than the common RSI.

» StochRSI

 

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» Standard Deviation

» Bollinger Bands

» Parabolic SAR

» Ichimoku

» Moving Averages » Fibonacci Trading
■ TRADING OSCILLATORS Oscillators

» Rate of Change

» RSI

» Williams %R

» Stochastic

» Gator

» Momentum

   

» MACD

» Awesome

» DeMarker

» DMS System

» CCI

» StochRSI
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Trading with Oscillators

George Protonotarios for WebForex.net ©