Accelerator Oscillator and its Signals
The concept of Bill Williams contains 5 measurements, the third of which
is used to determine accelerator or decelerator of the driving force. Awesome Oscillator
allows trader to determine the momentum, but in order to interpret its
force more accurately, Accelerator Oscillator is required.
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The price is the last one that will change on the market.
The founder of this indicator explains its essence quite easily. For
example, you have a ball and you push it to roll across the road. Here
it gains speed and then meets slide on its way. Gradually it will start
to slow down until it stops for the fraction of second and changes its
direction to the opposite one and its accelerator starts to grow again.
Remember that the price is the last one that will change on the market
just as the behavior of this ball. Before the direction of the bars on
the graph changes, the momentum will change first and the change of
accelerator which will be preceded by the change of the volume will take
place previously. But everything starts with the fact that we – traders
will make our own trading decisions – everything starts with us.
So, we have Awesome Oscillator histogram, which shows us the driving
force, but in order to estimate whether the price is accelerating
towards it or not we will need Accelerator Oscillator. So you see that
the bars are quite high on the Awesome Oscillator histogram, the bars
are outside the Alligators jaws,
but Accelerator Oscillator is almost invisible at the same time. This
means that there is no trend itself on the market yet. Most likely that
it is controlled by the “floor” traders who are trying to “stir you up”
and to “knock many people out” taking their money with the help of Stop
Loss at the same time.
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Location of the indicator in the terminal |
View of the indicator on the chart |
But let's move to the signals. There is no need to pay attention to the
zero line. It is important to observe the rule that the long positions
should be opened when the Accelerator Oscillator bar is green and the
short ones should be opened when it is red. It is desirable for the bars
of Awesome Oscillator and the ones of Accelerator Oscillator to be the
same color. In case it is not so, it is better to refrain from trading
if there is no obvious perspective to enter the market.
The signals of Accelerator Oscillator:
- Buy when the histogram is above the zero line. In order to set the Buy Stop order you need a red bar to be replaced by two green bars;
- Sell when the histogram is under the zero line. The Sell Stop is set when there is a green bar below zero which is replaced by two red bars;
- Buy when the histogram is under the zero line. The Buy Stop is set
when three green bars with higher minimums appeared after a red bar
under the zero line;
- Sell when the histogram is above the zero line. The Sell Stop is set
one point below the Low bar which corresponds to the third red bar.
The exploration of three measurements of the Bill Williams analysis will
allow trader not only to earn the money but also to accept the market
as a natural structure.
The notification to the last two signals: if the histogram crosses the
zero line then you can set the pending order after the second bar of the
required color.
Please remember that the signals of Accelerator Oscillator should be
taken seriously only after the fractal takes place and the Alligator
opens its jaws. Otherwise you risk to “feed” it with your money because
the price can stay inside the balance lines for a long time. And also
don't forget to analyze the Awesome Oscillator and the bars themselves
which tell you a lot about the behavior of bulls and bears.
The exploration of three measurements of the Bill Williams analysis will
allow trader not only to earn the money but also to accept the market
as a natural structure with unnecessary emotions and feelings. You will
learn fast analysis and be able to work with various currency pairs and
contracts in the course of time.