Oscillators

Oscillators

In the previous part of our tutorial, we’ve looked through the most popular trend technical indicators. The thing is that most of the time prices are meandering without a certain direction (they are ranging). While this directionless price movement drives some traders crazy, others manage to make a living on these roundabouts. Traders have a Plenty’s Horn of technical tools for trading ranging market. This tools are called oscillators. We will fill you in on the most popular ones.

Oscillators help us to identify pivotal points of the market – potential reversal areas. These indicators are banded between 2 extreme values indicating overbought and oversold areas. When the oscillator is in the overbought area, it means that the force of the bullish move has weakened and a reversal to the downside is likely. Accordingly, when the oscillator is in the oversold area, it means that the sellers have become weaker and the trend is likely to reserve up. 

Trading with oscillators is based on the recurrence principle: after hitting an extreme value, the oscillator always returns to its central reading. However, there’s a big difference between the dynamics of the price and the oscillator: although they move in tandem with each other, these moves have different proportions. As a result, when the indicator returns to its normal value, the prices usually don’t return to the same point.  

Oscillators are most effective when the prices move sideways. As the purpose of all oscillators is the same, there’s little point in adding several oscillators to one chart. Use oscillators in combination with other technical tools.

We recommend you to choose default MT4 settings for the indicators, as these parameters were proposed by the creators of these tools.   

Latest news

American shares are mixed

On Friday, American shares were mixed after the settlement because profits in the Telecoms, Oil & Gas, and Utilities sectors underpinned equities…

Greenback is affected by cautious Clarida remarks

On Friday, the evergreen buck declined versus its counterparts due to the fact that Fed Vice Chairman Richard Clarida expressed concerns as for global surge and came up with quite dovish remarks on monetary policy…

Euro zone inflation reaches six-year maximum in October

In October, euro zone inflation demonstrated its fastest tempo for almost six years, powered by energy prices…

Deposit with your local payment systems

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Internal error. Please try again later

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera