Trading with Aroon Oscillator involves the following signals:
Aroon Oscillator line above the zero — suggestion of a bullish market.
Aroon Oscillator line below zero — a bearish market.
The further the Oscillator line is from Zero level, the stronger the trend.
When values are near Zero line, the market is trending nowhere.
The idea behind Aroon Oscillator
Aroon oscillator is based on Aroon Indicator. Aroon Oscillator is a trend-following indicator that illustrates the strength of a current trend and its potentials to last.
How to interpret Aroon indicator
An oscillator that oscillate between -100 and 100.
It oscillates around zero line, defining times when AroonUp and AroonDown lines of Aroon Indicator cross each other.
Aroon Oscillator Formula
Aroon Oscillator = AroonUp - AroonDown.
Aroon Forex charts example
The positive value of Aroon Oscillator indicates an uptrend, while the negative value indicates a downtrend. The higher the absolute value of Aroon Oscillator, the stronger the trend.
- Download:Aroon_Oscillator_v1.mq4 5 Kb
Introduction One of the more common technical tools used by traders, the Bollinger Bands were created by John Bollinger in the early 80s. The tool was not intended as a technical analysis item for trading decisions, but its perceived utility for that purpose has made it widely popular in the ensuing decades. It is likely to be a part of any useful trading software, and is utilized both independently, and also as part of a general trading strategy by countless traders all over the world. Note: Past performance is not indicative of future results. Here we see a typical day’s price action analysed with the Bollinger Bands. We observe the contraction of the bands in the middle part of the chart, and on the left- hand side. In between, we observe the bands expanding as the violent up- and downward movements create great momentum in the market. The upper and lower lines are the standard deviations to be discussed below soon, while the middle line is the moving average often used as the signal line by traders. Calculation of the Bands The Bollinger Band consists of a moving average, and two standard deviation indicators superimposed on it. The standard deviation is used to determine how much the price diverges from the mean (i.e. how great the momentum is) for the ongoing market movement. Interested readers can refer to the related article on this website, but typically, the standard deviation will move away from the moving average in the middle when the price moves up or down with strong momentum. More concisely, the Bands consist of an N-period SMA, EMA, or smoothed moving average in the middle, depending on the choice the upper Bollinger Band, which is an N-period standard deviation multiplied with a factor K, and added to the SMA value the lower Bollinger Band, which is the same, but the standard deviation is subtracted from the SMA. N and K can be determined by the trader. Typical values are 20 for N (the SMA and standard deviation period), and 2 for K. The K factor is used to make bands pronounced and easily observed. Trading with the Bollinger Bands There are many different ways of interpreting the bands. At its simplest form, (and also as advocated by its creator, Professor Bollinger) the bands are used to measure volatility. They expand when volatility is rising, and contract when it is falling. The bands are a good gauge of volatility with very easily identifiable visual patterns emerging as the market progresses through various phases. In addition, over the years traders have also improvised many different ways of using this indicator for trading decisions. One way is to buy or sell when the price action crosses the upper or lower band, respectively, anticipating a breakout, or a rapid movement of the price. Trades are closed when the price returns to the moving average in the middle. Another way to use this indicator is anticipating a reversal after long periods of low or high volatility. For example, a trader will enter a buy order in an uptrend after the bands remain close together for a long while, anticipating the next leg of the trend to commence soon. There are also many composite strategies using the Bands for anything from confirmation to signal generation for an incipient price phenomenon. Accessibility Just about any trading platform will come equipped with the Bollinger Bands since it is so popular among traders. The MetaTrader 4 platform, DealBook of GFT Forex, FXCM Trade Station all provide this indicator, as well countless others not mentioned in this article. Conclusion Bollinger Bands serve two purposes. They depict market volatility in an easily identifiable form, and they also help us in trading decisions. The creator of the indicator does not claim that the Bands predict anything about future price action, but that doesn’t prevent the indicator being very popular in that role. It is, of course, up to you to decide in which way you’ll be using the Bands,
Jurik Volatility Bands is a volatility indicator, displaying price in the channel. Exit from the channel is impossible, while reversal from the borders is the signal for entering the market. The indicator is equipped with arrows for convenience. It is applicable for scalping and intraday trading. Arrows may appear earlier at scalping, so you need to wait for candlestick is closed. Does not draw. Jurik Volatility Bands usage example
I came by this Hurst Indicator when I was looking for some other time series trading information. I thought it was worth adding to indicator database although I have not looked into using it myself as of yet. Hope it provides someone with a useful tool to trading. Wiki states that “The Hurst exponent is used as a measure of the long term memory of time series, i.e. the autocorrelation of the time series. Where a value of 0 < H < 0.5 indicates a time series with negative autocorrelation (e.g. a decrease between values will probably be followed by another decrease), and a value of 0.5 < H < 1 indicates a time series with positive autocorrelation (e.g. an increase between values will probably be followed by another increase). A value of H=0.5 indicates a true random walk, where it is equally likely that a decrease or an increase will follow from any particular value (e.g. the time series has no memory of previous values)" This is interesting to me as I work on the assumption that a new high in the market is followed by a new high and a new low will be followed by another new low. You will be more right than wrong working on that assumption. When the Hurst exponent is near to 0.5 indicates a random walk where there is no correlation between any element and a future element and there is a 50% probability that future return values will go either up or down. Series of this type are hard to predict. I actually believe that the random walk ‘signals’ maybe of benefit more than the trend as there are increasing trading instruments (binary bets etc) that offer good protection for trading random events. Just a thought. Having done a search it seems a lot of harmonic traders use Hurst Exponent indicators in their trading. I guess this is a logical pairing as the patterns in harmonics often are directional so would be confirmed by readings on the Hurst scale. However you trad the hurst exponent just keep in mind the three principles of :-Value 0.5 – 1 = whatever is happening now is likely to continueValue 0 – 0.5 = whatever is happening now is likely to reverseValue around 0.5 = likely to go in any direction As always traders “suggest” using it in forex trading systems but that could be because forex is the most traded market so naturally any indicator will be “best” used in such trading systems.