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Oscillator Accelerator is one of the most widely used and popular oscillators in the world, and if we look at the Metatrader software, we can see that this oscillator is one of the first estimation tools. Accelerator Oscillator is simply unknown to many Iranian traders, that’s why in this article we decided to introduce you to this practical identifier and how to use it, stay with us.
Williams believes that the direction of the price movement always changes before the price itself, so observing the price movement instead of the price itself gives us predictive power.
The Accelerator Oscillator is always one step ahead of us and detects early price changes, whether the movement is bearish or bullish.
How to calculate the acceleration of the oscillator (Acceleration Oscillator)
Acceleration Oscillator is derived from Awesome Oscillator. Awesome Oscillator is one of the Williams indicators. This indicator compares 5 time periods with 34 time periods to get indications about market movement. The accelerator oscillator, which is derived from the same oscillator, is calculated by the following formula:
Acceleration Oscillator=Ao–SMA5(Ao)
SMA = simple moving average
Ao=Awesome Oscillator
Naturally, calculating all these numbers and following the tables seems like a tedious job, but luckily you don’t need to do this complicated operation and all the calculations can be done by software, your only job is to observe the charts.
Unlike the Awesome Oscillator, in the Oscillator, crossing the zero line does not mean a signal to buy and sell, and is only a sign that our trend is ongoing and we can trust it.
The signals are very easy to understand and follow in this oscillator. Positive values indicate an increase in the market price and negative values indicate a decrease in its price.
Williams emphasizes that you should never buy when you see red bars, and don’t sell when you see green bars. You have to pay close attention to the charts and changing colors of the bars so that you can catch signals on time.
Here’s a brief summary of how Accelerator’s oscillator works:
Buying above the zero line and selling below the zero line
According to Williams, if you are buying above the zero line or selling below the zero line, you are doing something right and in the direction of the chart.
To buy above the zero line you need two consecutive green columns to confirm the purchase.
To sell below the zero line you need two consecutive red columns to confirm the sale.
If you want to sell above the zero line and buy below the zero line, your work is against the movement of the chart. In such a situation, you need more signs to buy and sell:
To buy below the zero line, you need three consecutive green columns to confirm the purchase.
To sell above the zero line you need three consecutive red bars to confirm the sale.
Your signaling method is very simple and you should pay attention to the position and color of the bars.
As a trader, you should be proficient in some technical analysis such as trend line drawing so that you can at least recognize the direction of the market trend
When with the help of other oscillators such as stochastic or RSI and a little analysis, you notice a drastic change in the trend of the chart, now it is the turn of the accelerator oscillator to play a role, because its confirmation is important.
When you see red bars, it means that the chart is going down, and when you see green bars, it means that the chart is going up, but it is the position of these bars that gives you a valid signal, if the red bar goes from above the zero line to below the zero line. It is a sign of a price decrease and a downward trend in the chart, and we get a sell signal, and exactly the opposite, when the green bar goes from below the zero line to above the line, we will get a buy signal.
Again, we emphasize that you should not trade only with the signal of this oscillator and be sure to use other tools to analyze the chart.
Williams himself recommends using the Alligator indicator as a complementary tool alongside the Accelerator oscillator. He also says that using the Awesome Oscillator along with the Oscillator and the Alligator Indicator give us very reliable and accurate signals for trading. Of course, your choice to receive an accurate signal is not limited to these indicators and you can integrate your method with any of the Williams indicators.
Oscillator is an accelerator for predicting changes in price trends. According to Williams, it is better to use this indicator together with other tools such as the alligator indicator to give us a more accurate result. Bill Williams also emphasizes that identifiers are only half of the way, and using the right tools and getting training is the other half.
