WHAT IS 'OsMA'

OsMA is an abbreviation for the term oscillator of a moving average. Those investors and subscribers to technical analysis use OsMA to represent the variance between an oscillator and its moving average over a given period of time.

BREAKING DOWN 'OsMA'

The OsMa or oscillator of a moving average is a useful indicator of trends and relationships between data. The OsMA relationship is one of the most fundamental in technical analysis. Technical analysts favor the OsMa as a technical tool to signal when a security may be overbought or oversold, due to results of price and/or volume oscillators.

Most commonly, technical analysts use the MACD or the moving average convergence divergence to determine the OsMA. The primary life of the MACD serves as the oscillator with the signal line of the MACD acting as the moving average. In technical analysis the MACD is a type of trend-following momentum indicator that shows the relationship between two moving averages of prices. An analyst calculates the MACD by subtracting the 26-day exponential moving average or EMA  from the 12-day EMA. The nine-day EMA of the MACD is the "signal line," which is plotted on top of the MACD, determining when an analyst should buy or sell. Technical analysts frequently use the MACD, however there are many indicators for determining this relationship in technical analysis. Over time, analysts have developed many other indicators for similar purposes, making use of different oscillators and moving average calculations.

Indicator in Technical and Fundamental Analysis

The OsMA is a type of indicator that technical analysts use. For investors there are two main schools of thought: fundamental analysis and technical analysis. Technical analysis looks at data produced by a security to predict future price movements, whereas fundamental analysis looks at a larger group of factors, such as a company’s history and current market conditions. In other words, when beginning their analysis, a technical analyst begins with charts reflecting the security’s price movements, whereas a fundamental analyst starts with a company’s financial records in order to determine a company’s underlying value.

Both kinds of analysis use indicators, though which ones they use may differ. In both forms of investing, the term "indicator" refers to a set of statistics an investor uses to measure current conditions as well as to forecast financial or economic trends. In technical analysis, analysts rely heavily on indicators to predict changes in stock trends or price patterns to help find the best time and place to invest their money.

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