This is an oscillatory indicator. It is suitable for intraday traders. If the trader understands clearly how to use this indicator and follows it well, he or she is bound to make at least $100 per day. It is no fit for the scalpers since in the tighter timeframes of 30MIN and bellow, the indicator doesn’t give definite signals at an increased rate.
The type of signal given will vary according to the timeframe that you are using. For example, a buy signal may be given in the H1 timeframe and if you go to the 15MIN timeframe, you get the indicator is showing a sell signal. This is because the trend of the market prices depend on the timeframe that you are using although sometimes it can be the same in all timeframes. For example, if you use the D1 timeframe the trend is more consolidated and it is the direction of the prices as per each day. But within a single day, the trend may have moved up, down, then up and then down which would be better viewed when a lower timeframe is used.
The working of the OverTrend OSC indicator.
The OverTrend-OSC indicator is made up of bars that oscillate about a neutral/zero line. There is also a black line that follows the heights of the bars generated and thus oscillate about the zero level. The bars generated are by default of four different colors that include blue, DeepSkyBlue, Coral and red. The blue and DeepSkyBlue are displayed above the zero level while the red and the coral are displayed below the zero level.
Fig.1. The OverTrend OSC indicator explained.
The main bars that should be of concern to the trader are the blue and the red bars. These two bars are the signals for buying and selling respectively. The blue bars shows a continuous rise of the market prices while the red bars shows a continuous decrease in the market prices.
If you look closely to the bars that are generated by the indicator, you will notice that every bar follows a certain candlestick in the main trading chart. A red bar is formed when the candlestick on the main chart is a bear candlestick. A coral bar is generated when the candlestick formed in the main chart is a retracement (a small rise of the market prices after a steep down fall of the prices). A blue bar is generated when a bull candlestick is formed. A DeepSkyBlue bar is generated when a small retracement occurs on the market prices.
The length of the bars isn’t fixed. It varies depending on the size of the candlesticks formed. If you look closely, you will notice that a second blue candle is only formed when the candlestick formed is a bull candle.
Using the OverTrend OSC indicator to place and close orders.
Orders should only be placed if the bars generated by the indicator is blue or red.
When the indicator generates a blue bar, then the trader should place a buy order. When the indicator generates a red bar, the traders should place a sell order.
You should use stops for every trade that you place. The take profit should be placed at 150 point (15 pips) form the order while the stop loss should be placed at 200 pips (20 pips).
Fig.2. placing orders using the OverTrend OSC indicator explained.
As a trader, you should not place another order when the current trade has not yet closed.
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