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.
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.
Awesome Oscillator histogram
So, we have the 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.
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 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 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 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.
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.