Our team at Trading Strategy Guides goes to great lengths to develop tactics that bring you huge profits and small losses. Essentially, this means that from a hazard management view, you will continually operate with a preeminent hazard / reward interaction. The AO ( ) indicator was dubbed the "super indicator" thanks to the incredible results that certain traders had when using it.
The Tactic can be used in different markets, including Forex trading, , indices, and currencies. The beloved time frame for Bill Williams' Amazing Oscillator Tactic is the daily time frame. This is because, after extensive research and backtesting, our Trading Strategy Guides team has learned that the daily time frame creates the best performance.
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Before moving on, we need to conceptualize the indicators you require to trade Bill Williams' tactic and how to use the indicator.
The unique indicator you require is the: Amazing Oscillator Indicator.
What is Indicator?
The indicator is a histogram, which is similar to the indicator, that shows the market promotion of a current number of periods compared to the promotion of a larger number of previous periods.
If you are interested in learning more about the indicator, we suggest that you study the trend-following tactic - an easy-to-learn trading tactic, which is a turnkey trend-following plan.
What is the amazing oscillator setting?
The indicator uses a built-in default setting of 5 to 34 periods.
So how does it work?
Well, the histogram for the indicator (see chart below) is derived from the cost chart. The histogram is a simple 34-period moving average. This histogram is plotted using the center aspects of the bars (H + L) / 2, and is subtracted from the 5-period , represented by the center aspects of the bars (H + L) / 2.
What is the formula?
Average price = (High + Low) / 2.
= (Median Price, 5) -SMA (Median Price, 34).
If the AO histogram crosses above the zero line, that is indicative of encouragement. On the other hand, once it crosses below, that is indicative of encouragement.
How to use Indicator?
Bill Williams' is a versatile indicator that can be used to:
- Exploit trends
- Calculate the market boost
- And anticipate probable trend changes
The simplest and most direct way to use the Williams is to cross the zero line. However, there are other unique signals such as the saucer signal or the Twin Picks or divergences.
If you are curious about the strength of these AO signals, read on.
So let's move on!
How to use the Zero Line Crossover
Simply put, the zero line crossing measures the change in market encouragement:
Once the crosses above the zero line from below, it suggests encouragement and a viable trend reversal.
Once the crosses below the zero line from above, it suggests encouragement and a viable trend reversal.
See the AO table below:
Once the AO crosses above the zero line, it shows that short-term support is increasing faster than long-term support.
This information is drastically effective as a change in trend direction will consistently appear first in the short-term trend and then spread to the long-term trend.
Clearly, this is a sign of change.
Now, you may be familiar with the zero line crossing signal, as this is a common trading signal with various technical indicators.
However, the tends to offer far fewer wrong signals compared to other oscillators.
See the AO table below:
I use more to trade on a daily basis. AO is a good way to also be able to visualize trading, but beyond that, I consider it a good tool to be able to exit at an exact moment from a holding asset. Mostly 1d, 3d or 1w graphics.
The does not generate false signals, it generates movements that happen in the price, since, if they exist, however, these movements do not necessarily change the trend. AO is somewhat more complex and is usually slower, so it usually takes time to indicate changes.
If you want to learn how to modify AO settings yourself, simply click on the TradingView gear icon, AO Style and choose columns instead of the histogram.
As you can probably see, the amazing oscillating saucer measures short-term changes in trend speed.
In contrast, the saucer signal occurs when these four conditions are met:
The AO histogram is below the zero line.
We have 2 consecutive green bars
The second green bar is lower than the first bar
The third bar is red and lower than the second bar
See the currency table below:
Step 1: Identify in what period I plan to operate.
Step 2: I complement myself with other indicators for an easier and simpler use.
Step 3: We apply AO and we complement each other. We try to identify supports and resistances and enter a zone according to where the trend is heading, be it a continuation or change according to the period of time.
Step 4: We manage our risk and place StopLoss.
Step 5: We take profit of 50%. And we let it run. (Theory of holding positions, but ensuring profits). And the rest of the position we let it run with a stop in profits with a large loss of those same profits.