Accelerator Oscillator
Description
We continue to publish detailed materials about binary options oscillators for readers of our portal. Study our articles, put the information into practice in trading and achieve more in trading. In today’s review, we will talk about a useful indicator – the Acceleration / Deceleration oscillator, you will learn about its capabilities and advantages, you will be able to work with it correctly.
The Accelerator Oscillator (AC) is one of the technical indicators of trader Bill Williams. The purpose of the tool is to identify points of acceleration and deceleration of the price and show its positive or negative dynamics. As the author of the indicator noted, the price in the market is constantly changing: from the moment of slowing down to a complete stop of movement. It is important to see these trends and build your work on their basis: from the beginning, the price slowing down to its new movement.
Bill Williams analyzed the processes taking place in the financial market and said:
“The price decreases its speed before a reversal or correction, and when the trend intensifies, the price increases its speed.”
That is, the Accelerator Oscillator changes its direction after the driving force changes, which indicates a possible change in trend. The Acceleration/Deceleration indicator is able to accurately predict the phases of price dynamics in advance and this is valuable for the trader. Its advantage lies in the anticipatory information, correctly using such signals, you will compare favorably with other players.
You can see what the Accelerator Oscillator looks like on the MetaTrader 4 (MT4) platform in the image below. You can also download the MetaTrader 4 platform, add the indicator to the main chart and work with it.
What is the principle of operation of the Acceleration/Deceleration indicator
The indicator is used to predict price dynamics, this forecast is based on the laws of price changes, acceleration-deceleration phases. The price is the last thing that changes. Before the price changes, the dynamics of the market changes, and even before that, the acceleration of the driving force should go down to zero. The AC indicator shows the acceleration and deceleration of the driving force in advance.
On the chart, the Accelerator Oscillator is displayed as a histogram of two colors:
1. green candlesticks show price increases,
2. Price drop – red candlesticks.
Accordingly, using this data, you can work with PUT/CALL (down/up) transactions.
Indicator signals
- The presence of a histogram above the zero level (positive area) simultaneously with the formation of two candles in a row with new highs is a signal to open a buy trade.
- The presence of a histogram below the zero level (negative area) simultaneously with the formation of two candles in a row with new lows is a signal to open a sell trade.
- The presence of a histogram below the zero level (negative area) simultaneously with the formation of three candles in a row with rising lows is a signal to open a buy trade. A position is opened only after the price chart crosses the high of the signal candle.
- The presence of a histogram above the zero level (positive area) simultaneously with the formation of three candles in a row with falling highs is a signal to open a sell trade. A position is opened only after the price chart crosses the low of the signal candle.
Info taken from website forex-z.com
Calculation of the formula of the AC oscillator
The AC histogram is the difference between the 5/34 value of the driving force histogram and the 5-period simple moving average taken from that histogram.
MEDIAN PRICE = (HIGH + LOW) / 2
AO = SMA (MEDIAN PRICE, 5) – SMA (MEDIAN PRICE, 34)
AC = AO – SMA (AO, 5), where:
MEDIAN PRICE — median price;
HIGH — the maximum price of the bar;
LOW — the minimum price of the bar;
SMA is a simple moving average;
AO is an Awesome Oscillator indicator.
Info taken from metatrader5.com website
Do I need to install the Accelerator Oscillator on my platform?
The Acceleration/Deceleration Oscillator is integrated into almost all trading platforms, and it is also available on the MetaTrader 4 platform. In most trading terminals, the indicator is shown in the form of a histogram, which is convenient for obtaining the necessary data. In the settings, you can change the colors of the lines to your liking. Bill Williams advises setting parameters 5 and 34 for work, but each participant can independently select the parameters necessary for his strategy.
To add the Accelerator Oscillator to the price chart on the MetaTrader 4 platform, follow these steps:
1. Click the “Insert” tab in the top menu of the platform
2. Select the “Indicators” tab
3. In the drop-down menu that opens, select the “Bill Williams” tab
4. In the drop-down menu that opens, select Acceleration Oscillator
5. So, the oscillator is added to the chart, you can start working.
If your platform doesn’t have an Accelerator Oscillator, you can download it here.
Application of the indicator for binary options
1. The Acceleration/Deceleration Oscillator is a real find for any trader. It is indispensable for predicting price dynamics: it clearly shows the phases of acceleration and deceleration of the trend. Still, relying only on the data of this indicator is risky. We recommend connecting several oscillators that are convenient for you to the analysis.
2. The advantage of the Accelerator Oscillator is that its signals are leading and are shown earlier than the information of the main price chart, which will allow you to react in advance to the trend and, having made a bet, get a stable profit.
3. Due to its simple operation, as well as accurate data, the tool is suitable for both professional market players and beginners in trading.
4. To control the market situation, you can choose the simplest strategy: just monitor the color change. In this case, the logic of work will be as follows: you should not buy when the column is painted red, and, accordingly, sell when the column is colored green.
Rules for concluding transactions (screenshots)
Trading with a signal for a rise and fall in prices
With the help of simple oscillator histogram signals, you can work with PUT/CALL (down/up) trades.
The rise in prices is demonstrated by green candlesticks. Below in the image you can see what the upward trend looks like on the MetaTrader 4 trading platform:
To take advantage of the upward price trend and place a CALL ( up) rate with the Finmax broker, go to the finmaxbo.com broker’s website and follow the steps below to prepare the option data. To do this, specify:
1. Type of asset
2. Option expiration
3. Bet size
4. Forecast of quote movement: UP
5. Next, click the “buy” button and follow the results of currency movements on the chart.
Red candlesticks indicate a price drop. Below in the image you can see what the downward trend looks like on the MetaTrader 4 trading platform:
To take advantage of the downward price trend and place a PUT (down) rate with a Finmax broker, go to the finmaxbo.com broker’s website and follow the steps below to prepare the option data. To do this, specify:
1. Type of asset
2. Option expiration
3. Bet size
4. Forecast of quote movement: DOWN
5. Next, click the “buy” button and follow the results of currency movements on the chart.
Trading on signals below and above zero
When working with the Accelerator Oscillator, this is the most common way to find entry points. When the histogram of the AC oscillator is above zero, then:
You should buy a CALL option (up) when two sequentially growing green bars are formed. Below in the image you can see what the upward trend looks like on the MetaTrader 4 trading platform:
To take advantage of the upward price trend and place a CALL (up ) rate with the Finmax broker, go to the finmaxbo.com broker’s website and follow the steps below to prepare the option data. To do this, specify:
1. Type of asset
2. Option expiration
3. Bet size
4. Forecast of quote movement: UP
5. Next, click the “buy” button and follow the results of currency movements on the chart.
You should sell a put option (down) when three successively decreasing red bars have formed one after another after the green bar. Below in the image you can see what the downward trend looks like on the MetaTrader 4 trading platform:
To take advantage of the downward price trend and place a PUT (down) rate with a Finmax broker, go to the finmaxbo.com broker’s website and follow the steps below to prepare the option data. To do this, specify:
1. Type of asset
2. Option expiration
3. Bet size
4. Forecast of quote movement: DOWN
5. Next, click the “buy” button and follow the results of currency movements on the chart.
When the AC indicator is below zero, then:
You need to buy a CALL option (up) after three sequentially rising green bars are formed, which were preceded by a red bar. Below in the image you can see what the upward trend looks like on the MetaTrader 4 trading platform:
To take advantage of the upward price trend and place a CALL (up ) rate with the Finmax broker, go to the finmaxbo.com broker’s website and follow the steps below to prepare the option data. To do this, specify:
1. Type of asset
2. Option expiration
3. Bet size
4. Forecast of quote movement: UP
5. Next, click the “buy” button and follow the results of currency movements on the chart.
It makes sense to sell a put option (down) when two declining red bars appear. Below in the image you can see what the downward trend looks like on the MetaTrader 4 trading platform:
To take advantage of the downward price trend and place a PUT (down) rate with a Finmax broker, go to the finmaxbo.com broker’s website and follow the steps below to prepare the option data. To do this, specify:
1. Type of asset
2. Option expiration
3. Bet size
4. Forecast of quote movement: DOWN
5. Next, click the “buy” button and follow the results of currency movements on the chart.
Money management
How to increase profits in trading is only part of the work of a market player. It is in the solution of this issue that novice traders go headlong, not thinking about the budget planning strategy .
Meanwhile, reaching positive statistics of one’s own transactions is the first thing a professional should think about. How to save money and ensure a constant stable income – in most cases, financial market professionals are already thinking. It is wise to use capital and not be left without funds is much more important than one-time successful transactions. Money management is something that a novice trader should accustom himself to.
Money management in binary options is competent money management, a set of rules, the application of which will minimize risks and maximize profits. Competent management of personal funds has always been considered the key to the success of trading in any market.
Money Management Rules
Minimum bets
When bidding, bet the minimum possible amount on the option. Do not transfer the entire deposit and will be able to continue trading in case of failure.
Minimum deposit
Mastering the possibilities of trading, determine for yourself the financial range that you can spend and transfer a minimum of funds to the deposit. It should not be large sums and especially not your last money. So, in case of an unsuccessful transaction, you will still have a free cash reserve that will allow you to continue playing.
Minimum funds
When starting the first steps in binary options trading, do not put all your funds in one trade. It should be no more than 5% of the deposit. You should always have the means to continue trading. Also, trust your funds to the broker that guarantees you the best profitability. Remember to minimize losses and do not spend more than the planned funds.
Minimum assets
When trading, do not participate in all possible tradable assets at once. The more transactions, the greater the load on your deposit and the greater the probability of not even noticing how there will be no funds left. Gradually exploring the possibilities of the market, start with two or three assets and then increase their number. Try yourself in stocks, futures, get acquainted with the stock market.
Minimum emotions
Immersing yourself in trading, do not forget about your emotions: do not succumb to worries and the desire to master everything at once. Bidding is not a lottery, but a serious job. After three trades, stop trading, remember the risks and a sober mind. Remember the statistics of the rule of three: three failed trades are enough, and you will start to panic and try to recover lost funds.
Money management is your reliable strategy and your closest way to success in binary options trading!
Expiration
Expiration of binary options (from English Expiration) is the end of the transaction, as a result of which the fulfillment of obligations will occur: in case of a positive outcome of the transaction, the broker transfers funds to the market participant. The role of expiration in trading is great: it will depend on the income and success of the transaction. Binary options have become so popular because after 60 seconds you can get income.
Which expiration to choose, each time you decide for yourself: indices or commodities are suitable for short-term trading; For stocks, choose a week as the end date of the transaction; For currency trading – transactions from an hour to a month.
Types of binary options depending on expiration:
Short-term options are options with an expiration date of less than an hour. They are very popular with beginners in trading, they have a high degree of risk, since it is difficult to predict the movement of the market.
Long-term options are options that have a longer expiration date: from a week to more than a month. Popular with professionals, because. Before determining the expiration, it is first necessary to conduct a detailed analysis of the dynamics of the asset, take into account the economic situation, and other factors that may affect changes in market trends.
Is it possible to extend the expiration of options?
Not all brokers allow you to change the expiration date. Extension of the expiration period is possible only in the direction of its increase. To extend the expiration, you need to deposit the missing funds from the value of the option.
Expiration rules:
1. If you are new to trading, when participating in a trade, try to choose a longer expiration.
2. Choose a broker carefully, preferring the site where it is allowed to increase expiration. So, in case of failure, you can minimize your losses.
3. If you need a quick income, choose a short-term (from a minute to several hours) expiration for options trading. Don’t forget about the risks.
4. If you are interested in a stable income, choose a long-term expiration for trading. So, in case of a positive outcome, you will be provided with high profitability.
Expiration in Accelerator Oscillator Strategies
Trading with a signal for a rise and fall in prices
The expiration period in this case can be chosen depending on your experience and the purpose of trading: both short-term (scalping) and long-term.
Short-term trading: more like a lottery, for a quick interval (60 seconds) it is difficult to predict the price dynamics, the result is always unpredictable.
Recommended expiration: from 5 minutes to 1 hour. So, you will have time to trace the dynamics of the trend, this is a good and reliable time period that guarantees the movement of the asset in the predicted direction.
Expiration of more than an hour: you can not only analyze the price behavior over a similar period of time, but also predict the price behavior depending on the news, economic and political situation.
Trading on signals below and above zero
Short-term expiration: acceptable, but unpredictable. Both losses and gains are possible.
Recommended expiration: 1 hour. The ability to more accurately predict the outcome of the transaction and get a good income.
Expiration of more than 1 hour: will allow you to accurately determine the price movement, for this the trader studies the price dynamics, considers touches and returns. With this approach, the bidder will have a good return.
Trading with the Alligator Strategy
The strategy will allow you to determine in advance the origin of the trend and the price dynamics in the future period. At this time, you need to participate in trade. The Accelerator Oscillator and Alligator oscillators are used. A signal to buy a CALL option from the AU – if the candle closes above the lips of the “Alligator” – the green line. A signal to buy a PCI option from an AC is when the candlestick closes below the red line of the Alligator.
Short-term expiration: acceptable, but random and unpredictable. Both losses and gains are possible.
Recommended expiration: from 1 minute to several days. So, the outcome of the transaction can be predicted by studying the behavior of oscillators in previous periods, observing the economic situation, the dynamics of the trend.
Long-term expiration: more than a week. An option for professional traders who have the necessary experience of analysis in conditions of sensitivity to market fluctuations. A good yield awaits the bidder.
Trading with three indicators
A simple strategy will help you identify buy/sell signals for PUT and call options. It consists of three indicators: Awesome Oscillator, Accelerator Oscillator and Parabolic SAR. Buying an option occurs when all indicators show a signal on the same candle.
Short-term expiration: acceptable, but random and unpredictable. Both losses and gains are possible.
Recommended expiration: from 1 hour to a four-hour period. A great opportunity to observe the movement of the trend, the market situation and get an accurate signal.
Long-term expiration: also recommended for trading in this strategy. You will need general knowledge of the market, analytical skills, and increased profitability.
Stochastic + Awesome + Accelerator Oscillator Trading Strategy
For trading, you will need Awesome (AO), Accelerator (AC) and Stochastic oscillators. All three tools allow you to give a clear understanding of trends and identify entry/exit points. Stochastic shows oversold-overbought levels. Awesome shows the state of the trend in the market, when Awesome and Accelerator are colored in the same color, this is a strong trend signal.
Short-term trading: since it resembles a lottery, the result will be unpredictable, the profitability will be low.
Recommended expiration: from 30 minutes to 4 hours. This is a fairly comfortable period of time in order to see the dynamics of the trend and predict the correct movement of the asset in the predicted direction.
Long-term expiration: possible, requires experience and knowledge. It is possible not only to analyze the price behavior, but also to predict the price behavior depending on the news, economic and political situation.
HMA + Awesome + Accelerator Oscillator Trading Strategy
A very simple and effective strategy. Three indicators are used: HMA, Awesome Oscillator and Accelerator Oscillator.
Buying a call option: HMA – line growth, color changes from red to green; Awesome Oscillator – green; Accelerator Oscillator – green.
Selling a PUT option: The HMA line changes from green to red; Awesome Oscillator – red; Accelerator Oscillator – red.
Short-term expiration: acceptable, but characterized by high risks. Both losses and gains are possible. The yield is low.
Recommended expiration: from 1 hour to several days. So, the outcome of the transaction can be predicted by analyzing the behavior of oscillators in previous periods, the economic situation, and the presence of hot news.
Long-term expiration: more than a week. An option for professional traders who have a positive experience in market analysis. A good yield awaits the bidder.
To test all expiration options in practice, we recommend using the Finmax broker platform, just go to the finmaxbo.com website. The advantage of this platform is that you have a choice of expiration from 30 seconds to six months. Here you can not only check the strategies listed in the review, but also find your comfortable one among them and get a stable income.
Downloads
MetaTrader 4 (MT4) platform – download
Oscillator Accelerator Oscillator for the MT4 platform – download.
