Oscillator

AAA

DEFINITION of 'Oscillator'

A technical analysis tool that is banded between two extreme values and built with the results from a trend indicator for discovering short-term overbought or oversold conditions. As the value of the oscillator approaches the upper extreme value the asset is deemed to be overbought, and as it approaches the lower extreme it is deemed to be oversold.

INVESTOPEDIA EXPLAINS 'Oscillator'

Oscillators are most advantageous when a clear trend cannot be easily seen in a company's stock such as when it trades horizontally or sideways. The most common oscillators are: the Stochastic oscillator, RSI, ROC and MFI.

RELATED TERMS
  1. Money Flow Index - MFI

    A momentum indicator that uses a stock’s price and volume to ...
  2. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
  3. Stochastic Oscillator

    A technical momentum indicator that compares a security's closing ...
  4. McClellan Oscillator

    A market breadth indicator that is based on the difference between ...
  5. Percentage Price Oscillator - PPO

    A technical momentum indicator showing the relationship between ...
  6. Chaikin Oscillator

    An oscillator which measures the accumulation distribution line ...
RELATED FAQS
  1. What are the most common examples of Range-Bound Trading strategies?

    Once a trader recognizes – by seeing at least two similar highs and two similar lows that establish the upper and lower boundaries ... Read Full Answer >>
  2. How can Low Swings on securities be used to spot profitable trading opportunities?

    Swing lows in an overall bull market provide investors the opportunity to add to their equity holdings and make additional ... Read Full Answer >>
  3. How do I use Price Rate Of Change (ROC) for creating a forex trading strategy?

    The price rate of change (ROC) technical indicator is a momentum indicator, or oscillator, which can be used to indicate ... Read Full Answer >>
  4. How are Spinning Top patterns interpreted by analysts and traders?

    The spinning top candlestick pattern is usually interpreted by traders and market analysts as neutral or indicative of possible ... Read Full Answer >>
  5. What are the differences between Relative Strength Index (RSI) & Commodity Channel ...

    The relative strength index (RSI) and commodity channel index (CCI) are two popular technical oscillators that serve as different ... Read Full Answer >>
  6. How do I use Moving Average Envelopes to create a forex trading strategy?

    Moving average envelopes are percentage-based envelopes set above and below a moving average trendline. It doesn't matter ... Read Full Answer >>
  7. How do I use Elder-Ray Index for creating a forex trading strategy?

    The Elder-Ray index can be used to create a forex trading strategy for critical market turning points where a market reversal ... Read Full Answer >>
  8. How do I use The Dual Commodity Channel Index (DCCI) for creating a forex trading ...

    The dual commodity channel index (DCCI) was originally created for use in commodity futures trading. Its use has since been ... Read Full Answer >>
  9. What are the best technical indicators to complement the Dual Commodity Channel Index ...

    The best technical indicators that complement the dual commodity channel index (DCCI) are trendlines, moving averages and ... Read Full Answer >>
  10. What is the difference between fast and slow stochastics in technical analysis?

    The main difference between fast and slow stochastics is summed up in one word: sensitivity. The fast stochastic is more ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    Confirming Price Movements With Volume Oscillators

    Use this indicator to validate a change in price direction and moving averages.
  2. Active Trading

    Measure Momentum Change With ROC

    Learn how to build a price rate of change indicator and incorporate it in your strategy.
  3. Active Trading

    Finding The Trend With Aroon

    Don't be confused about whether a long-term trend will continue, stall or reverse.
  4. Forex Education

    Tweezers Provide Short-Term Precision For Forex Traders

    Precise and short, the tweezer setup is similar to the more popular double top/bottom formations.
  5. Active Trading

    An Introduction To The Relative Strength Index

    Learn the difference between relative strength and the relative strength index, a frequently used technical analysis oscillator.
  6. Forex Education

    Stochastics: An Accurate Buy And Sell Indicator

    Find out how stochastics are used to create buy and sell signals for traders.
  7. Active Trading

    Advantages of TRIX - Triple Exponential Average

    This powerful tool not only filtrates market noise but also tends to be a leading rather than lagging indicator.
  8. Active Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  9. Active Trading

    Candlesticks And Oscillators For Successful Swing Trades

    Take advantage of short-term price moves by pinpointing reversals.
  10. Chart Advisor

    Traders Look To Dividend Funds (VIG)

    When uncertainty creeps into the mind of an active trader it is not uncommon for this type of person to turn toward the safety of dividends.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center