How to Use The Accelerator Oscillator For Forex Trading
The Accelerator Oscillator indicator helps detect different trading values that protect traders from entering bad trades. It identifies if the market momentum is going to continue, stall, or reverse. In this article, we take a deep dive into the Accelerator Oscillator indicator.
What is an Accelerator Oscillator?
Technical analyst Bill Williams developed the Accelerator Oscillator indicator to better understand the market’s changing momentum. The indicator consists of red and green bars depicting when not to buy or sell a trade.
- When the last bar in the currency pair price chart is green, it signals traders not to enter buy orders.
- When the last bar in the currency pair price chart is red, it signals traders not to enter sell orders.
The Accelerator Oscillator shows when an uptrend or downtrend momentum in the market is slowing down and provides traders with opportunities to close profitable trades before the market loses its momentum.
How to read the Accelerator Oscillator
When there are multiple green bars on a forex price chart, it indicates bullish market momentum. This indicates that there are more buyers than sellers in the market, and prices are continuously rising. It signals traders to place buy orders above the centreline. The higher the green bar reaches in the histogram, the stronger the bullish momentum is. The centreline or zero line is the line that depicts a balanced momentum, which means that the market is neither bullish nor bearish at this point. Red bars, on the other hand, indicate a bearish market momentum and indicate that there are more sellers than buyers in the market. It signals that prices are falling, and traders should place sell or short orders below the centreline. The lower this red bar is, the stronger the bearish market momentum is. You can also spot reversals with the Accelerator Oscillator indicator. When the bars change their colour from red to green, it means that the downtrend is ending and an expected uptrend is occurring, signalling traders to long their trades. On the other hand, a shift from green to red bar depicts a bearish market momentum signalling traders to short their trades.
How to calculate the Accelerator Oscillator
The Accelerator Oscillator can be calculated with multiple moving averages. It consists of a fast-moving average and a slow-moving average that is depicted through a histogram under the currency pair’s price chart. The difference between the fast-moving average and the slow-moving average is the Awesome Oscillator's value. The Awesome Oscillator is also a Bill Williams indicator that compares the currency market price movement with its historical price movements to enter or exit a trading order. Thereafter, the Accelerator Oscillator can be calculated by subtracting the 5-period simple moving average of the Awesome Oscillator from the Awesome Oscillator itself.
How to trade with Accelerator Oscillator
Since the Accelerator Oscillator helps eliminate bad entry timings, it is essential to look at both the currency pair’s fluctuating values and the colours of the bars. Too many red bars occurring together signal that you should not place buy/long orders, and too many green bars occurring signal that it is not the right time to place sell/short orders. You can also trade with the Accelerator Oscillator based on when the indicator crosses the zero line, which indicates a change in the market momentum.
- When there are two or more green bars above the zero line consecutively, traders receive a signal to long or buy a trade due to expected bullish market momentum. However, If you want to place buy/long orders when the indicator is below the zero line, you need three or more green bars occurring consecutively to trade along with the bullish market momentum.
- When there are two or more red bars below the zero line consecutively, traders receive a signal to short or sell a trade due to an expected bearish market momentum. However, if you want to place short/sell orders when the indicator is above the zero line, you need three or more red bars occurring consecutively to trade along with the bearish market momentum.
Trade with the Accelerator Oscillator to better time your entries
The Accelerator Oscillator helps in identifying the right time to enter and not enter a trade in the forex market. It provides traders with the current market momentum and helps them determine if long or short orders need to be avoided in the current market scenario. Start trading Blueberry Market’s forex trading platform to access all Bill Williams indicators and use them together to receive confirmed trading signals about your favourite forex pairs. Sign up for a live trading account or try a risk-free demo account.
The Beginner’s Guide to MQL5
MetaTrader, as a platform, has built-in functions that assist in technical analysis and trade management while also allowing traders to develop their own indicators and trading strategies.
How to Use DeMarker Indicator For Forex Trading
Every trader needs to know precisely when to enter or exit a forex market.
A Forex Trader’s Guide to Awesome Oscillator
When you understand market momentum, you can better identify market reversals.
What is Money Flow Index?
The Money Flow Index can analyse the volume and price of currency pairs in the market.
What is The Ichimoku Kinko Hyo Indicator?
The Ichimoku Kinko Hyo indicator provides traders with the market’s current momentum, direction and trend strength.
Top Pullback Trading Strategies
Pullback trading strategies provide traders with ideal entry points to trade along with the existing trend.
What is High Wave Candlestick?
The High Wave Candlestick pattern occurs in a highly fluctuating market and provides traders with entry and exit levels in the current trend.
What is the Parabolic SAR indicator?
Identifying market trends becomes easier with the Parabolic SAR indicator as it provides the ideal entry and exit signals in strong trending markets.
What is Currency Correlation?
Currency correlations help trade multiple currencies in the forex market by identifying the market trends of each currency pair.
Price Action Trading Strategy
A Price Action Trading Strategy helps find ideal entry and exit points depending on expert opinions, news announcements, or technical indicators.
Average True Range
Average True Range (ATR) helps in identifying how much a currency pair price has fluctuated. This, in turn, helps traders confirm price levels at which they can enter or exit the market and place stop-loss orders according to the market volatility.
Moving Average Crossover
The Moving Average Crossover is a valuable tool to find the middle price-point of a trend in forex trading. When currency prices crossover their current moving averages, it helps traders identify the favorable buying or selling points for the currency.
What is the Bullish Engulfing Candlestick?
Bullish Engulfing Candlesticks helps in identifying an uptrend reversal in the market. This candlestick pattern stands out because a trader does not need to wait until the entire pattern is completed to enter a trade.
How To Trade The Gartley Pattern
The Gartley pattern helps identify price breakouts and signals where the currency pairs are headed. The pattern is also widely used in the forex market to determine strong support and resistance levels.
How to Trade Forex With NFP V-Shaped Reversal
A Non Farm Payroll (NFP) V-shaped reversal refers to a sudden increase or decrease in the currency pair prices right after an NFP report is released.
Candlestick Patterns: Top Candlestick Charts Every Trader Should Know
Candlestick patterns depict the price movement of assets in a graphical manner. Candlestick patterns also enable traders to predict market behaviour.
What is the Evening Star Candlestick Pattern?
Evening Star Candlestick Patterns help traders identify ideal exit levels in the forex market by signalling a slowed upward momentum and strengthened downward momentum.
How to Use Ichimoku Cloud in Forex?
The Ichimoku Cloud provides a clear market trend direction to the traders and helps them make market decisions accordingly.
Pennants Pattern: How to trade bearish and bullish pennants
Pennant Patterns work as a continuation signal in the forex market and help identify the ideal entry and exit price points
How to Trade Forex With Renko Charts
Renko Chart is a technical indicator that provides strong market trend directions by filtering out minor price movements
What are Ascending and Descending Triangle Patterns?
The Ascending and Descending Triangle Patterns confirm continued trends in the forex market.
How to Identify Cup and Handle Pattern in Forex Trading
The Cup and Handle Pattern is a technical price chart that forms the shape of a Cup and a Handle, which indicates a bullish reversal signal.
What is the Head and Shoulders pattern?
The Head and Shoulders pattern is a trend reversal indicator that predicts bullish to bearish and bearish to bullish reversals in the forex market.
What is the Hammer Candlestick Pattern?
Hammer Candlesticks enable traders to identify potential market reversal points, determine the ideal time to enter the market and place buy or sell orders accordingly.
What is The Opening Range Breakout Strategy
The Opening Range Breakout (ORB) Strategy involves taking forex positions when the currency pair prices break below or above the previous day's high or low
Morning Star Indicator
The Morning Star Indicator helps identify strong trend reversals in the forex market and enables you to take trade position entry decisions accordingly.
How Does Stochastic Indicator Work in Forex Trading?
Stochastic Indicator helps traders identify overbought and oversold market conditions that substantially lead to market reversals.
Favourite Fib Fibonacci Retracement
Fibonacci retracement strategies help traders identify the market's support and resistance levels, trend reversal points, and entry and exit decisions.
Heikin Ashi Candlestick Pattern
The Heikin Ashi Candlestick pattern is almost the same as the traditional candlesticks, with one big difference—the former is an averaged out version of the latter.
Multiple Time Frame Analysis in Forex
By monitoring different currency pairs in different time frames, you can make your Forex trades more successful and profitable.
What are Bollinger Bands?
The Bollinger bands can help identify overbought and oversold market conditions, protecting you against placing any orders that could lead to losses.
Andrew's Pitchfork Trading Strategy
Andrew's Pitchfork is a Forex trading strategy that can predict protracted market swings and help you in identifying potential market trends that can indicate potential exit and entry points.
Fibonacci retracements are one of the most popular methods for predicting currency prices in the Forex market. Predicting upward or downward market movement can help traders with accurate price analysis for exiting or entering the market.
Trading in Volatile Markets
Forex volatility is the measure of how frequently a currency's value changes. A currency either has high volatility or low volatility depending on how much its value deviates from its average value.
The ABCD pattern
One of the most classic chart patterns, the Forex ABCD pattern represents the perfect harmony between price and time.
The Bearish Gartley Pattern
The Bearish Gartley pattern was introduced in 1935, by H.M. Gartley in his book, “Profits in the Stock Market”. The pattern helps Forex traders in identifying higher probabilities of selling opportunities.
The Bullish 3 Drive pattern
The Bullish Three Drive pattern in Forex trading is a rare pattern that gives traders information about the Forex market's potential at its most Bearish point, and in turn, suggests probabilities for a market reversal.
What is the MACD Indicator?
The Moving Average Convergence Divergence (MACD) indicator helps traders quickly identify short-term trend directions and reversals in the forex markets. You can use the MACD indicator to determine a currency pair price trend's severity and measure its price's momentum and even identify the bearish and bullish movements in the currency pair prices.
Guide to Forex
Enter your details to get a copy of our
Start a risk free
News & Analysis
Catch up on what you might
have missed in the market.