Instruments that can indicate a change in current trend are becoming increasingly popular in the trading of electronic contracts. Short-term deal after a trend reversal is the best option for making a profit, since earnings in transactions with electronic contracts do not change from the distance the price has passed. Therefore, on most trading platforms, including Pocket Option, there is an Awesome Oscillator (AO). This indicator is extremely simple, and at the same time reliable.
Trader will be able to find this instrument in the list of standard indicators. In the trade room, AO is located under the chart window like all representatives of the “oscillator” type. Trader needs to click on the pencil icon in the upper right part of the window for configure the instrument.
Calculation method and indicator parameters
Awesome Oscillator is designed to determine the driving force of the market and the upcoming trend change. When calculating the AO, the Moving Average (MA) was used. The value of MA is subtracted from the average price for 5 and 34 periods.
The AO indicator is usually displayed on the trading floor as a histogram located above and below the zero mark. In the Pocket Option terminal, users can select the appearance of indicator in settings. The following options are available:
B. Williams is the creator of the Awesome Oscillator. He is a famous trader and developer of such popular instruments as the Alligator and Fractals.
It is worth noting that AO is applied not only in the trading of electronic contracts, but also in other types of financial markets.
How to trade contracts using the Awesome Oscillator?
As mentioned above, this oscillator from B. Williams is extremely simple to use, but at the same time is most effective in trading electronic contracts. So, the main signal to action is the case when the histogram intersects the zero mark of the oscillator scale. From it follows that:
- Call-contract must be bought at the moment of moving the histogram upwards through the zero line;
- Put-contract, on the contrary, must be bought at the moment of moving the histogram downwards through the zero line.
In addition, the Awesome Oscillator clearly indicates the state of divergence. This phenomenon is also a good signal to open a deal. For example, in the figure below, the user can see that the last price peak on the chart is higher than the previous one, and on the oscillator everything is exactly the opposite. As already known, the trader should focus on the behavior of the indicator at the time of divergence. In this case, the contract Put is relevant.
Awesome Oscillator is applied on any timeframe. The expiration time for this trader should be set in the amount of the formation time of 2 bars.
This instrument is suitable even for beginners who have just begun to take the first steps in the world of electronic contracts. However, both novice and experienced traders should not be neglected, the signals of the Awesome Oscillator in combination with other advisors within the trading system.