Oscillator Variables

With all the oscillators, you can experiment with the variables to settle on values that work for the security you trade on the time scale you use. The oscillators can be applied to any time scale, so you can equally well use them on weekly charts, for instance to check on the markets direction, before using daily charts for timing your trade. You want a balance between getting too many signals that can cause you to trade too much, and having too few signals so that you miss potential trades.

Many traders try to tie the variables to the market cycles. The monthly cycle, which is about 20 trading days, is one of the major influences, and you can also use harmonics of this, such as the five days (half of a half) used for the momentum indicator. We’ll be going into cycles in depth in Module 9.

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