Awesome Oscillator

Awesome Oscillator

Awesome Oscillator

As we have already said in a couple of other educational articles here, Bill Williams was a very successful trader because he was one of the first people to apply the market psychology principles. This allowed him to come up with several very interesting and helpful trading tools which are used even today. One of those tools is the so-called Awesome Oscillator and we are going to examine it thoroughly in the rest of this article. However, we have to warn that there are topics that are better suited for beginners that this one, so if you’re new to this type of trading, we suggest you take a look at our articles for beginners. If not, let’s get going!

Awesome Oscillator | Bars

Now then, Awesome Oscillator is a Bill Williams Indicator designed to help you determine the market’s momentum. Just like all other Oscillators, this one is also plotted under your chart and is composed of bars going above or below the zero line. These bars come in two different colours – red and green –which shows you whether the value of the bar is climbing (green) or falling (red). Obviously, if the price is going up you will want to buy Call options, otherwise Put options should be what you invest in. However, this is just the most basic principle of using the AO – you can get several important signals from it, too. To learn more about how and when to invest based on the candles on your screen, just continue reading the article.

Awesome Oscillator | Signals

The Awesome Oscillator can provide you with three main signals you can use when entering the market. The first is related to the nought line and in this case you want a green bar above the line after a red one has appeared below it. This is when you want to target Call options. The next type of signal is called the Saucer and is composed of three bars, all of which are above zero. The first one should be green and followed by a red one, with the third bar being green again. Finally, there’s the so called Two Pikes signal. If the pikes formed by the bars are separated by a hollow and the second pike is dropping down closer to zero, you want to focus on Put options. This can also happen below zero, but if the second pike is closer to zero in this case, Call options should be favoured.

Awesome Oscillator | Conclusion

As you can see, the Awesome Oscillator can be used in multiple ways and represents a great solution when you want to see how much momentum the market has. Of course, keep in mind that it never hurts to back the information you get here up with another trading tool. To find the right one, take a look at our other educational articles on this website. There are loads of things to explore!

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Author: Ben Prescott
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