What is an Awesome Oscillator?
What is the history of the Awesome Oscillator?
How does Awesome Oscillators work?
How to calculate Awesome Oscillator
The AO consists of a simple moving average of 34-periods. It”s planned across the center of the rows, and is subtracted from the simple moving average of 5-periods after median size. The median price is determined by adding a given period’s high value and low value, then dividing that amount by 2.
AO= SMA (median price, 5) – SMA (median price, 34)
Importance of the Awesome Oscillator
- This is a valuable predictor during a business trend;
- This is a leading indicator as it tests the traction in the market;
- The predictor can be used on different asset types.
- The details provided by the awesome oscillator can be used by traders to predict market trends. Also, whether the current trend will persist or reverse.
Challenges of the Awesome Oscillator
- It can give many false signals, depending on the strategy; AO Readings on Low Float Stocks Can Get Tricky.
- Traders should avoid using it as an indicator in their own right.
- High Awesome Oscillator Values Give higher pricing. As a counter-trader, you may trade in the opposite direction of the main pattern, if a high value in the AO returns.
You may think the stock will not go further when you see high readings. It is where life as a dealer can get very complicated to you.
- Low float movers, in the day trading community, are a big deal. So, how does the AO indicator handle movers with low floats? Like most of the metrics – not so good.
What are some points to avoid problems using the Awesome Oscillator?
Strategies for Trading Awesome Oscillator
There are several different awesome oscillator trading strategies to choose from. The oscillator technique aims to affirm or disprove patterns. It also identify possible points of reversal. The awesome oscillator can help a trader determine when or whether they should open a buy or sell position. Below are the strongest signals for which to exchange by using Awesome Oscillator:
- Zero Line Crossing: It is a simple technique for the Awesome Oscillator’s computing. A cross over zero approves that an uptrend has been formed. When the AO value moves above or beneath the zero lines, traders ought to look for chances to put only buy orders on the market. But, when the Awesome Oscillator is above the zero line, go long but when the Awesome Oscillator is below the zero line making a peak, go short.
- Saucer Strategy: A Saucer System is aiming for speedier momentum shifts. The awesome oscillator saucer is a trading symbol used by other researchers to detect future rapid momentum changes.
The saucer strategy involves looking for changes that are on the same side of the zero line in three consecutive bars. The Awesome Oscillator represents ‘Saucer’ purchasing and sale incentives. It uses the 3 histogram bars as follows:
Buy Signal Conditions: The Awesome Oscillator is above zero Two successive histogram bars are red (falling). The third histogram bar is green and higher than the second Position a buy order at the open of the fourth bar
Sell Signal Conditions: The Awesome Oscillator is below zero Two successive histogram bars are green (rising). The third histogram bar is red and lower than the second Position a sell order at the open of the fourth bar
- Twin Peaks: Twin Peaks is a method where the differences between two peaks on the same side of the zero line are considered. This technique helps traders to pick business openings that are likely to be opposite. The technique needs two peaks and a trough to form the Awesome Oscillator, both on the same side of the zero-line.
A bullish twin peak is formed below the zero-line, with the second peak higher than the first peak and a green bar followed. At the flip side, above the zero-line, a bearish twin peak is created, with the second peak lower than the first and a red bar following. A bullish twin peak is a signal for placing a buy order whereas a bearish twin peak is a signal for placing a sell order.
When to use Awesome oscillator
When not to use the Awesome Oscillator
What indicators can be used with the Awesome Oscillator?
Market conditions for Awesome Oscillator
Final thoughts on Awesome oscillators
Bill Williams stated thus in his book, “It is the best momentum indicator available on the stock and commodity markets, without any doubt. It is both simple and classic. It is basically a simple moving average of 34 bar, subtracted from a simple moving average of 5 bar.”
If you’re a momentum trader, Williams Awesome Oscillator strategy is a great one. We don’t look to grab tops and bottoms, but when the trend has moved in our direction, we try to join the market.
It is a more subtle way to swap breakouts, as breakouts often signal a momentum transfer. In essence, this means that you will always be trading with a higher risk-reward ratio from a risk management perspective. However, the AO Indicator was called the “super indicator” because of the unbelievable results some traders used it.
The Awesome Oscillator is an indicator that tries to gage whether bearish or bullish forces are driving the market at present. It achieves so by contrasting the current market movement accurately, with the general trend across a wider time period.
1) High amazing oscillator values create higher value for capital.
If you’re a counter-trader, a high valuation in the AO may lead you to want to take a trade in the alternative direction of the pattern. it’s normal to see the incredibly high reading and then think to yourself, there’s no chance the stock will go any higher.
2) AO readings can get troublesome on small float stocks.