Trend oscillator.
The main difference between any technical analysis indicator and an oscillator is that the indicator simply analyzes the trend, while
the oscillator also tries to predict further developments.
The trend oscillator is true to its name; it attempts to predict the direction of the trend in Forex.
He does this using a curved line displayed in a separate window below the chart of the currency pair; in addition, when trading, the zero line is also used, which serves as the main guideline for opening transactions.
Basic parameters of the trend oscillator.
You have at your disposal a fairly simple tool, which, once installed on a currency pair chart, appears in a separate window.
The signal curve is displayed in red, and the window itself is divided into two parts by a gray zero line.
In the settings, in addition to the thickness and color of the lines, you can change only one parameter N, it regulates the number of bars participating in the analysis.
That is, the higher you set the value, the smoother the trend oscillator line itself will be. For this reason, values up to 20 are used in trading on time periods up to H1, more than 20 for short-term and long-term trading.
The larger the N value, the smoother the oscillator line becomes. For example, when scalping , it is better to set the value N to less than or equal to 5, this will allow you to react more quickly to trend changes over short time periods.
In addition to the curve, there is also a horizontal line that divides the oscillator window into almost equal parts; this line helps to determine the general trend on the selected time frame.
If the curve moves at the top of the window, then the upward trend continues, and accordingly vice versa. Practical use.
The trading strategy using this instrument is as simple as possible: buy trades are opened when the curve moves in the upper direction at the point where it crosses the zero line, and sell trades are opened when it crosses in the lower direction.
If you carefully analyze the operation of the trend oscillator, you will probably notice that not all signals are correct, but this is not surprising, because in technical analysis there are no 100% correct oscillators or indicators. Therefore, to check signals, use one of the additional tools located in the “ Forex Indicators ” section.