The oscillator is a momentum indicator greatly used in Forex Trading to pinpoint potential trend reversals. The oscillator indicator measures momentum by comparing the closing price to the trading range in a given period.
These are the chart indicators that can help traders in determining overbought or oversold conditions in ranging markets. Many traders use multiple oscillators to confirm range extremes and determine the important entry and exit points. We will look at some profitable forex oscillators which are reliable, low-risk, and profit-earning.
Top 10 Profitable Forex Oscillators
Here are the top 10 profitable forex oscillators which a trader should use.
- MACD (Moving Average Convergence/Divergence).
- RSI (Relative Strength Index).
- Stochastic Oscillator.
- CM (Chande Momentum Oscillator).
- CCI (Commodity Channel Index).
- DeMarker Indicator.
- AO ( Awesome Oscillator).
- Bollinger Bands.
- Pivot point.
#1 MACD (Moving Average Convergence/Divergence)
MACD is some of the most popular oscillators, and Gerald Appel created the MACD. He was one of the famous traders and analysts. As the name says, this earning oscillator is composed of several moving averages with different parameters. They are the profitable forex oscillator.
It consists of two lines representing a 12-period EMA and a 26-period EMA. It signals a change in trend when a short period EMA crosses a long period EMA with the price charts. The oscillators are calculated in a separate window on the desktop.
#2 RSI (Relative Strength Index)
RSI is the most popular and normalized oscillator. J.Welles Wilder developed RSI. It shows the position of the current price compared to the previous period and is displayed in a separate window under the chart of your asset.
RSI becomes an excellent option for forex trading flats as it shows how much the price has deviated from its average. It is calculated by finding a relative strength of an asset. Trading signals are generated up to 70 levels; above 70 is called overbought and is the profitable forex oscillator.
#3 Stochastic Oscillator
George Lane created the stochastic oscillator. He listened to price moves in some cycle, moving from one level to another, sometimes turning oversold and overbought. The stochastic oscillator shows whether buyers and sellers can close the day at the reached highs and lows.
This low risk oscillator is displayed in a separate window under the price chart, and it consists of two lines: K% and D%, which means fast and slow. Values vary from 0 to 100 at the levels of 10 and 80 signal lines drawn. These areas are used to find signals to buy and sell. A stochastic oscillator is considered a profitable forex oscillator.
#4 CM (Chande Momentum Oscillator)
The CM oscillator is another relatively popular among traders. Id differs from RSI and Stochastic oscillators because it does not have overbought and oversold levels. Instead, they have a neutral and flowing line that sends the signals.
The difference between the closes and the sum of all recent lower closes are calculated in this oscillator. Then the solution is divided by the sum of all price movements and multiplied by 100. It will keep rising as long as the price rises, so you can use it in trend following or to find divergences.
#5 CCI (Commodity Channel Index)
Donald Lambert designed the commodity channel index as a non-normalized oscillator. It helps to find the trading instrument is overbought or oversold in which state. It evaluates the current relationship between price and the SMA.
The CCI also shows how much the price deviates from its average. The CCI highs reveal that the quotations have grown a lot, while lows show that the quotations have dropped, deviating from the average, and deviating from the average again.
#6 DeMarker Indicator
DeMarker was created by a famous trader and tech analysis guru Thomas DeMark. It is an original oscillator. DeMarker calculates the position of the current price compared to the previous period, helps define the market situation, and finds the place for a possible reversal.
It is calculated in a separate window. DeMarker oscillates from 0 to 100, and the calculating algorithm compares current highs and lows to the extremes of the previous period.
#7 AO ( Awesome Oscillator)
The famous market trader Bill Williams created the awesome oscillator. He designed the oscillator for use in his Profitunity trading system. It is based on the difference between the values of two SMAs, and this reliable oscillator is the most used profitable forex oscillator.
The oscillator is displayed in a separate window under the price chart graph. Awesome oscillator shows a new high when the trend is increasing, and if the indicator declines, renewing a new low, the trend is decreasing.
#8 Bollinger Bands
John Bollinger created Bollinger Bands, and bollinger bands are forex oscillators. Bollinger Band’s main element is the moving averages. The classical moving average is in the middle, and the two standard deviations are on the upside and the downside.
This trading oscillator is very easy to use and provides a reliable trading entry. Two lines in the Bollinger bands oscillator, the upper and lower lines, work as dynamic support and resistance levels. Rejection levels indicate a possible entry.
Fibonacci is a trading oscillator that shows the most exact market direction as it is related to every creature in the universe. The Fibonacci tool is a golden ratio of 1.618. Traders use this ratio in the forex market to know the market reversal and 2 profit per day.
If the price moves over a trend, corrects over 61.8% Fibonacci retracement, and shows a market reversal, the likely price moves the current leg’s 161.8% Fibonacci extension level.
#10 Pivot Point
The pivot point oscillates the equilibrium level of supply and demand of a currency pair. The supply and demand of the particular pair are the same when the price moves above the pivot point level; this confirms that the demand for a currency pair is high.
But, the supply would be high when the price moves below the pivot point. Price tends to move at equilibrium before setting any direction in the financial market. The pivot point oscillator provides a possible trading entry from rejecting the pivot point.
These are the top 10 profitable forex oscillators that are the most popular and widely used.
What Is The Most Profitable Forex Oscillator?
The history of the financial markets is long, and getting involved in financial markets has never been easier. Many oscillators have been developed to try and analyze and predict what may happen next.
While analyzing the profitable forex oscillators, MACD, RSI, Stochastic, and awesome oscillators might be the best. Forex oscillators are used to identify oversold and overbought levels.
Best Profitable Forex Oscillator For Day Trading
MACD, RSI, and stochastic oscillators might be the most profitable forex oscillators for day trading and are the volatility forex oscillators.
Moving averages are the best oscillators in the market for day trading. We can use Moving averages in various ways; you can use them for trading reversals that happen when the two moving averages make either a bullish or bearish crossover or use them for trading divergences that happens when an asset is rising while the MACD is making slow downward trends, and use it for trend following.
RSI is also the most profitable forex oscillator for day trading. RSI can also be used in many ways. The most popular method to use this positive oscillator is to identify overbought and oversold levels. The oversold level is at 30, while the overbought baseline level is at 70. RSI can be used for trend following. As long as the RSI is in an upward trend, the asset’s price will keep rising.
A stochastic oscillator is one way of using an oscillator to buy extremely oversold and then sell when it gets extremely overbought. It can also be used to find divergences and even reversals.
Most Effective Profitable Forex Oscillators To Learn
Oscillators are chart indicators that can assist a trader in deciding overbought conditions or oversold conditions in ranging markets. Most traders use multiple oscillators to confirm range extremes and determine the main entry and exit points.
RSI is a popular and profitable forex oscillator that measures the extent of recent price changes to determine overbought or oversold conditions in an instrument’s price. The lower range of the relative strength index is 30, and the upper range of RSI is 70.
Then the mid-range is 50. The concurrence amongst technical analysts is that the relative strength index becomes oversold at the 30 levels and overbought at the 70 levels. These are commonly used to gauge a stock’s overbought or oversold levels.
Extremely Profitable Signal Oscillator In Forex
The Bill Williams Awesome Oscillator strategy can be applied across different markets, and commodities, including stocks, forex currencies, and indices. The preferred time for an awesome oscillator strategy is the daily time frame, denoted as after extensive research and backtesting.
Usage Of Awesome Oscillator
- Used to exploit trends.
- To gauge the market momentum.
- To anticipate possible trend reversals.
Conclusion – Percentage Of ROI In Profitable Forex Oscillator In Trading
Return on investment is the profit or loss percentage one has done after selling the security that they had purchased; this can be calculated by simply dividing the net profit or loss on the investment by the total cost of the investment. According to conventional wisdom, an annual ROI is approximately 7% or greater. It is considered a good ROI for an investment in stocks.