Oscillators in trading: what you can expect of them
Category : Strategy
The assets analysis in the financial market can consist of almost any instrument of both a technical and a fundamental approach. The trading strategy helps us determine what kind of approach (patterns, news or indicator) should be used, as every api fix trader has his own trading strategy. But to improve the very process of analysis, today, a huge amount of auxiliary software has been created. The world of automation made it possible to apply various methods and algorithmize the trading process, as a result of which the analysis toolkit expanded.
According to the US Bureau of Statistics, most traders conduct their trading using technical elements, as well as trading robots based on the HFT trading, i.e. high-frequency speculative algorithms, which include fix api arbitration techniques –http://forexzzz.com/product/forex-zzz-lock-arbitrage/. With regard to the use of technical elements, one of the most popular is the use of a group of oscillator indicators.
Oscillators are a group of technical indicators that allow the trader to receive a series of signals about the current state of the market. By identifying the overbought and oversold zones, the manager can fix open trade transactions and with the help of trend reversal signals, to enter the market at the very beginning of his movement.
In order to more fully understand the principle of trading indicators from a group of oscillators, I propose to examine in more details the tradesignals they demonstrate:
- Oversold zone: it signals to the trader that the quotes have already declined sufficiently and further sales are unlikely. If this signal falls on the achievement of local minima, then this will be a confirmatory filter that it is worth to limit your open positions.
- Overbought zone: it gives a signal that the quotes on the contrary have already grown sufficiently and their further growth is limited. Similarly, if the quotes are at the local maximum or resistance level at that moment, then they are additional filters that indicate a decrease in currency pairs in the fix apiforex market. I recommend you to use overbought and oversold zones as an exit filter from the open positions, but not as a signal to action.
- Signals to the trend reversal are carried out by means of divergence, which indicates the divergence or convergence of price quotations with the value of the technical indicator. That is, when the quotes of the financial asset decrease, and the oscillator value grows, this will be a signal to turn and it is worth to expect the asset to move towards the indicator. Similarly, when the quotes increase, and the indicator shows a downward trend, then we should expect the trend to turn into a decline.
Considering the fact that now we know all the signals that arise due to the use of oscillators, we can more accurately enter the market and expand our trading strategy with these elements. However, these signals do not appear to absolutely all indicators, but each signal appears to certain indicators. Therefore, they can also be divided into two groups following the nature of the trading signals formation for fix api trading:
- Overbought and oversold zones: RSI, MFI, Stochastic.
- Divergence: Awesome Oscillator, MACD (http://forexrobotshub.com/2017/09/26/technical-indicator-macd-use/).
Personally, I use the Awesome Oscillator in my trading to find possible correlation zones by triggering a divergence. Also, this indicator allows you to receive additional trading signals due to its histogram form. Thus, the third directed histogram in a row indicates the purchase or sale of the financial asset of the fix apiforex market, depending on the current position of the indicator itself.
I hope that today’s small review will help you to choose a working tool that you can use in your trading strategy or expand the list of filters to make the final decision.