Perhaps the most common way of analysis and prediction the future value of a financial asset is to use technical elements, primarily indicators. What could be simpler than an automatic process, when it is enough for the fix api trader to look at the chart with the indicators and say what further movement is to be expected. The mathematical justification for forecasting quotations has been applied for several years, not even for the first ten years, because all the key technical indicators were created back in the 70-80’s.
The simplicity and efficiency of these technical elements caused an increased interest in the application of these analysis techniques in their fix api trading. In view of this, many technical indicators have been created, and the key ones can be divided into three groups:
We’ll consider today the last ones.
Oscillators are a group of technical indicators, which in their mathematical basis determine the rate of price movement over time. The main goal of these indicators is that they reflect zones of the so-called “overbought” and “oversold” areas.
The overbought zone signals that quotes at this point of time have drastically deviated from their values and have gone to a range that they have not been for a long time. Thus, if the growth of quotations outstrips the technical indicator growth from the group of oscillators (RSI, AO, CCI, etc.), this indicates that the current value of the asset in the fix apiforex market has grown significantly, reaching its maximum in this zone, and you should expect a rollback.
The oversold zone operates exactly the opposite way. If the quotes decrease faster than the indicator’s decrease, then when the technical element’s boundary is reached, it is worth waiting for the damping of the pulse and the beginning of the corrective wave.
These zones are inherently the trade signals used by the trader. However, I would single out one more trading signal, which appears together with the oscillators movement. It’s about divergence.
Divergence is a technical element of analysis that indicates the end of the formed movement and the immediate transition to a new phase of the market. To put it simply, when the quotes decrease, and the indicator’svalue grows vice versa, one should expect the principle of quotes divergence to work and he should open a deal for purchase. But you need other analysis elements to help you find the entry point, because the divergence itself only gives a signal for a turn, and not a specific entry point. The oscillator from Bill Williams – Awesome Oscillator is the best way to determine the divergence, about which you can read more here – https://www.oanda.com/forex-trading/learn/forex-indicators/awesome-oscillator.
- When the trend is attenuated. Oscillators indicate a possible end of the movement and thus contribute to go out before the turn. Thus, the application of this tool allows you to exit the transaction with the greatest benefit;
- When the market is flown. If the market formed a lateral movement, then due to overbought and oversold zones, you can determine the entry points. However, one should take into account that the signal will be stronger if overbought and oversold will be at the border of the channel, and not in the middle. This will be an additional filter, which will help fix api trader to enter the position more profitably.
As you can see, the indicator data group allows both to find the entry and exit point. I do not emphasize that oscillators are a “magic wand” for a trader, but this is an excellent tool that allows you to increase your trading result. Personally, I use a technical indicator AO in my trade to determine the divergence, as well as to look for Elliott Wave Markup. Given all the simplicity and efficiency of the oscillators, these elements can be implemented in an algorithmic approach (http://forexzzz.com/product/forex-zzz-lock-arbitrage/), to automate the result.