MetaTrader4
Mastering the Accelerator Oscillator for Trading Success
The Accelerator/Decelerator Indicator (AC) is a powerful tool that helps traders gauge the acceleration and deceleration of market momentum. Think of it as your early warning system; it can signal changes in market direction before the price shifts, giving you a significant edge.
The zero line, or nought line, is where the driving force and acceleration are in balance. When the AC indicator is above zero, it typically indicates a higher likelihood of continued upward movement; conversely, if it's below zero, the same holds true for downward movement. Unlike the Awesome Oscillator, simply crossing the zero line isn't a signal in itself. Instead, pay attention to color changes. Remember, if the AC is red, it's not a good time to buy, and if it's green, you should avoid selling.
If you're looking to enter the market in line with the current momentum (the indicator being above zero for buys or below for sells), you want to see two consecutive green bars before buying, or two red bars before selling. If the AC is working against your intended position (below zero for buys or above for sells), you’ll need an extra column for confirmation. In this case, seek three consecutive red columns above the nought line for short positions and three green columns below it for long positions.
Calculation
The AC bar chart is calculated by taking the difference between the values of the 5-period and 34-period driving force bar charts and then subtracting the 5-period simple moving average (SMA) from that.
AC = AO - SMA(AO, 5)
Where:
SMA — Simple Moving Average;
AO — Awesome Oscillator.
Understanding the Indicator
For a complete breakdown of the Accelerator/Decelerator Oscillator, check out the Technical analysis: Accelerator/Decelerator Oscillator.
2005.11.29
