Oscillator

Last modified 13:23, 5 Nov 2012

Oscillator

An Oscillator indicator graphically displays the interaction between two moving averages, one slow moving, the other slightly faster.

Generally the shorter the time period, the more responsive the moving average will be, and it will be said to be faster.

When the time period used to generate the moving average is longer, the effect of price changes is smoothed out, and the line appears more stable. It will be said to be moving more slowly than a moving average with a shorter time period.

When two moving averages are graphed together by the Oscillator tool, the interaction of these differences in price analysis can be graphically displayed, usually as a histogram fluctuating on either side of zero, see graphic below.

In addition to comparing the movement of two moving averages in one oscillator graph, the Oscillator tool allows users to view and compare two oscillators (referred to as Plots 1 and 2) at the same time.

By default, only Plot 1 is visible. Plot 2 can be displayed by selecting the Visible check box in the Plots tab of the Oscillator Properties dialog box, see below.

Oscillator Moving Average Parameters

The parameters for the moving averages for both plots are set in the Parameters tab of the Oscillator Properties dialog box:

oscilatrprops.png

The default values are shown, and by default only Plot 1's histogram will be displayed.

Plot 1 in this case will display the interaction of a 5 period Simple Moving Average with a 35 period Simple Moving Average based on the Close data field.

Use Plot 2 to compare the oscillator effect of other moving averages with Plot 1's oscillator display.

Users can also chose a different data field to create the moving averages with.

Display Oscillator Plots

By default, a single oscillator (Oscillator 1) is displayed in a histogram format:

oscilatrhistgrm1plot.gif

The intersection of the two moving average lines takes place at 0 level, the histogram forming above and below that level whenever one moving average line crosses the other moving average line.

Histogram is the default display Style, however, the oscillator can also be displayed as points, steps, or a solid, dotted or dashed line.

The display of both Oscillators is controlled by the same tabbed page. To change the appearance of either oscillator, select it from the drop-down menu:

oscilatrpropsplots.png

To display the second oscillator, select Oscillator2 from the drop-down menu, and check the Visible check box. The two oscillators will now be displayed:

oscilatrhistgrm2plots.gif

Both oscillators will share the same zero level.

Note - In order to avoid one oscillator obscuring the other, it is suggested that the line style be selected for one oscillator' and histogram for the other.

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