Every trader of this currency market has heard about the term Awesome Indicator forex. Experts recommend it as one of the best kind of oscillators and provide a clear representation of the market momentum. Most newbies as well as veterans look to receive more knowledge about this awesome oscillator. So here is an article dedicating to the intricacies and strategic importance of this oscillator.
Awesome oscillator – the intricacies:
This indicator comes in the form of a histogram with two distinct colors – red and green. A red indication depicts that price movements are going down hinting for a bearish market. On the other hand, a green indication depicts that price movements are climbing showing a bullish trend. It also serves as a vital tool in depicting floor and ceiling values of a particular currency pair.
In its simplest form, this oscillator makes use of calculations from a couple of SMAs or Simple Moving Averages. Not only does this help in finding out overbought and oversold conditions; but also ensures that one receives the most profitable opening for his trade.
Formulating through Awesome forex indicators:
This formula draws a comparison of two moving averages – one on the long term and the other on short term durations. While most reliable indicators use this approach of comparing a couple of MAs, the awesome indicator stands out by calculating its moving average with candlestick mid-points rather than its closing ends.
A highly volatile day signifies a larger mid-point. So, by using closing ends for MA calculation, a trader gets a chance to peak into larger activities and volatilities of the market. Using this method, investors will be able to keep track or even forecast a major trend reversal that is likely to occur in the near future of this market.
Charting with this indicator:
When using an awesome indicator forex, it needs charting. This chart can be prepared in any format, the most popular being histograms. In a histogram, this oscillator fluctuates between negative and positive margins.
A positive reading on this histogram signifies that fast readings are greater and more prominent while negative readings signify that slow readings are gaining prominence in this case. Pertaining to this, the histogram chart shows green when oscillation is below ‘0’ and red when it is above ‘0’.
Strategies of awesome oscillator:
There are three main strategies that prove to be beneficial for most traders. They are.
1. Saucer Strategy:
Three histograms are present here covering all short and long entries.
For long setup
• Two consecutive red histograms are present.
• Awesome forex indicators stay above zero.
• Traders go long on the fourth candlestick.
The short setup represents an exact vice-versa of this above setup.
2. Cross strategy (Above or below ‘0’):
When the awesome indicator shifts from negative periods to positive territories, investors must ponder on the long position. On the contrary, a negative trend shift asks traders to go short on their live openings.
This signal receives best readings on a 5-min chart. This duration renders near to exact value regarding the effectiveness of a strategy.
3. Twin peak approach:
Twin peaks are of two types – Bullish and Bearish twin peaks. The bearish trend signifies awesome oscillator value above ‘0’ along with a couple of swing highs. It culminates in the second peak being red on a 5-min chart.
Bullish trend on the other hand shows oscillation values below ‘0’ along with a couple of low swings and the second peak projecting green on a similar chart.
Whatever may be the approach, experts recommend the twin peak approach as the most profitable one. But, it is of utmost importance to try out this awesome indicator forex on a demo account before implying them on the live account. Therefore, sign up today and initiate your trading strategy now.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.