Indicator - Stochastic Oscillator


Oscillators

The oscillator is derived from the Latin word “oscillo” which means swing or movement. In technical analysis, oscillators represent a mathematical expression in relation to the speed of the price movement. Because of this, they also call the indicators of their advance.

The oscillators are mainly used to determine the price of the so-called "saturated buying" and "saturated selling" zones. The saturated buy means that the indicator is at its maximum rate and therefore the next increase in the price is less likely. In the case of the sale of the indicator, the indicator is at the lowest rate and therefore the further movement of the price will no longer continue. From the above, it pursues that the traders are using the oscillators to change the trend.

Oscillators are often used when there is a flat and the market does not have a sharp expression. The indicators in trading terminal MT5 are displayed in a separate window below the schedule. The trader can change the settings of some oscillator at its discretion and in this way it will get such an indicator that is better suited to its trading system.

The main task of the trader is to use the oscillator to receive a signal indicating the change in the trend and in the same way open the position of the new trend.

Indicator - Stochastic Oscillator 

Pic 1 - Stochastic Oscillator - saturated buying and saturated selling zones

Picture 1 is a familiar indicator for a trademark. It has two lines and symbols are% K and% D.

Indicator - Force Comparative Index (RSI)

This indicator was developed in 1978. Comparative index indicator of power is used to determine the most expensive purchase and saturated selling zones. For many traders, the oscillator is more easily understood because it has only one curve in contrast to the statistics.


Picture 2 - Trade according to RSI Oscillator

In addition, these indicators, as well as other oscillators, are used to determine the price and indicator curve divergence. This is a very rare but at the same time quite a strong signal to open the position.


Indicator - Williams Percentage Range (Williams% R)

Picture 3 - Indicator - Williams' percentage range

If we take classical Statistics and introduce it, then we will get the value of Williams's percentage range. This indicator is based on analyzing the closing price of candles. The indicator is mainly used for identifying saturated buying and saturated selling zones. Position opens when the indicator goes to 0 or 100 marks.

The major mistake of the beginner traders is to trade with oscillators

Many traders believe that a successful "magic" oscillator is enough for successful trading, through which we can see the trend change. This is a very wrong idea because the trading strategy based on oscillator alone is very likely to be unprofitable and the start-up seller is very disappointed in this regard. The oscillator can only be considered as an auxiliary tool for market analysis. In conjunction with other instruments of market analysis, he may give some benefit to the trader.





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