Ultimate Oscillator

AAA

DEFINITION of 'Ultimate Oscillator'

A technical indicator invented by Larry Williams that uses the weighted average of three different time periods to reduce the volatility and false transaction signals that are associated with many other indicators that mainly rely on a single time period.

INVESTOPEDIA EXPLAINS 'Ultimate Oscillator'

This is a range-bound indicator, which means the value fluctuates between 0 and 100. Similar to the RSI, levels below 30 are deemed to be oversold, and levels above 70 are deemed to be overbought. Transaction signals are derived by finding situations where the price is going in opposite directions than the indicator. Once this divergence has been identified the trader will wait to confirm the transaction by using other technical indicators.

RELATED TERMS
  1. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Overbought

    1. A situation in which the demand for a certain asset unjustifiably ...
  3. Oversold

    1. A condition in which the price of an underlying asset has ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
  6. Divergence

    When the price of an asset and an indicator, index or other related ...
RELATED FAQS
  1. Why is the Ultimate Oscillator important for traders and analysts?

    The ultimate oscillator is considered an important technical momentum indicator because it seeks to provide more reliable ... Read Full Answer >>
  2. What is a common strategy traders implement when using the Ultimate Oscillator?

    The ultimate oscillator is an indicator that traders use to measure momentum across three time frames. Using three time frames ... Read Full Answer >>
  3. What are the best technical indicators to complement the Ultimate Oscillator?

    Technical indicators used to complement the Ultimate Oscillator include candlestick patterns and moving averages. Developed ... Read Full Answer >>
  4. What is the Ultimate Oscillator formula and how is it calculated?

    The formula for the Ultimate Oscillator is designed to compare short-, intermediate- and long-term price movements to show ... Read Full Answer >>
  5. What are the most common momentum oscillators used in day trading?

    Several momentum oscillators that are effective in daily or weekly trading are also effective in intraday trading, though ... Read Full Answer >>
Related Articles
  1. 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.
  2. Forex Education

    Stochastics: An Accurate Buy And Sell Indicator

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

    Momentum Indicates Stock Price Strength

    Momentum can be used with other tools to be an effective buy/sell indicator.
  4. Active Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  5. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.
  6. Stock Analysis

    A Trader's Look at the S&P 500

    Moving averages are sending an important signal, and it's probably not what you think.
  7. Chart Advisor

    ChartAdvisor for March 27 2015

    A weekly technical summary of the major U.S. indexes.
  8. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.
  9. Chart Advisor

    These Oil Service Stocks Are Ready For A Move Higher

    In the oil services sector, active traders have been trying hard to establish a floor and the double bottom pattern that is appearing on the chart suggests that a short-term reversal could be ...
  10. Trading Strategies

    The Top Five Stocks For Novice Swing Traders

    New to Swing Trading? Here are the top five stocks recommended for swing trading.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center