The difference between oscillators and indicators
In the first stages of learning to trade, few people pay attention to the characteristics and subtleties of various
indicators.
In most cases, over a long period of time, almost every beginner looks at indicators as some kind of lines that, when crossed, give a signal to buy or sell.
By the way, more experienced traders are also guilty of such short-sightedness. As a rule, such a view leads to only one outcome, and it is fatal for your account.
This is due to the fact that you make your trades on the basis of not reasoned facts, but only because the line crossed something or went somehow differently than usual. For you these are lines and drawings, nothing more.
Types of indicators. Main purposes
Creating your own trading strategy is very much like a construction set, where you create a complete structure from ready-made blocks. Therefore, in order to achieve a truly positive result, you must at least understand what tasks and properties of certain groups of indicators.
In the MT4 trading terminal, it is not without reason that all indicators are divided into groups such as oscillators, trend indicators, and volumes. A reasonable question arises: what is the difference between oscillators and other indicators?
What is the difference between trend indicators and oscillators and why do we need such a group of indicators as volumes? To understand all these issues, let's look at each of the groups separately.
Trend indicators
The main purpose of trend indicators is to monitor the current situation on the market. Based on the name of the group, it immediately becomes clear that trend indicators perfectly show the current situation on the market, the global trend and the direction of the trend.
For a beginner, trend indicators help to distinguish the current direction of the market, which can sometimes be quite difficult to see with the untrained eye.
Volumes
Indicators from the volume group are designed to catch the so-called big players. I think it’s no secret that behind every rise or fall there is a certain amount of money supply, which led to this jump.
So, thanks to indicators from this group, a trader can find out whether capital is behind a certain jump or whether it is an ordinary false movement unsupported by anything.
Oscillators
Indicators from the oscillator group are used by traders because of their sensitivity to market reversals. Simply put, it is oscillators that have the ability to predict in advance a possible market reversal.
Many people mistakenly believe that oscillators only show global reversals, but in practice it is oscillators that help raiders enter on pullbacks.
So what is the fundamental difference between indicators and oscillators?
If the first two groups show the current situation on the market and give signals to enter a position with a delay, then the oscillators, on the contrary, show possible market turning points in advance.
In fact, this is an attempt to predict market movement as in the example of Stochastic. The Stochastic Oscillator analyzes changes in such indicators as overbought and oversold and, based on the data obtained, predicts a change in trend.
It would seem that oscillators are a more advanced technical analysis tool that allows you to enter the market ahead of most competitors.
However, do not forget that oscillators give a lot of false signals, so by combining the positive qualities of some indicators with others, you can cover certain shortcomings and create a truly competent profitable trading strategy .