awesome oscillator trading Archives

What is the win rate of the Awesome Oscillator Trading Strategy? Does the Awesome Indicator work in Forex and Stock Market Trading? Well, we have tested the Awesome Oscillator before on the Trading Rush Channel, and it was not that awesome. It had a profitable win rate, but the win rate was not that good or bad. And it was certainly not better than some of the trading strategies we have seen on the Trading Rush Channel. When I tested Awesome Oscillator 100 Times, I used the zero line to enter the trades. If you don’t know what I’m talking about, check out that Awesome Oscillator video to learn more. Awesome oscillator with the zero line cross strategy gave late entry signals, and since the zero line cross trading strategy was not that good, some of the comments on that video suggested taking trades at the color change of the bars. Well, there is a similar widely used Awesome Oscillator Trading Strategy, and in this video, I’m going to test it 100 times to find it’s win rate so you don’t have to. And at the end of this video, I’m going to give the Awesome Oscillator Strategy a Trading Rush Score, to see where it ranks up against other strategies we have tested so far.

This is the Awesome Oscillator, and if you have watched the previous Awesome Oscillator Trading Strategy Video, you already know that the entry signal according to the Zero Line Awesome Oscillator Strategy, is right here. But if you look closely, the entry signal looks a little bit late. In fact, it was one of the reasons Awesome Oscillator only got an average win rate. So instead of buying and selling at the crossover, what will happen if you bought at the color change of the bars? Now remember, Awesome Oscillator is a momentum indicator, so these are showing the momentum. But many traders also use it to identify the trend direction. There is a zero line on the Awesome Oscillator, and in an uptrend, the awesome oscillator value will probably stay above the zero line. And in a downtrend, the Awesome Oscillator Value will probably stay below the zero line.

Lets say, there is an uptrend going on. Now in this uptrend, the Awesome oscillator will most likely stay above the zero line. It will show the increasing momentum. And during the pullback, when the price makes a small move down, it will change its color and start to go down. On the Trading Rush Channel, I have always said that it is a good idea to buy near the end of the pullback. Since this is an uptrend, we want to enter when the price loses its downward momentum. Last time, when the price was trending up, we entered a long position when the Awesome Oscillator Value crossed above the zero line. And we sold when the Awesome Oscillator was crossing below the zero line in a downtrend. This time, we are going to enter early to see what happens.

So the second Awesome Oscillator Trading Strategy goes something like this. When the awesome oscillator is below the zero line, you buy when the Awesome Oscillator value goes higher three times in a row. Why the third bar? Well, while testing, I found out that Awesome Oscillator was changing colors frequently in a range. So to avoid taking too many trades in a range market, the entry is when the Awesome Oscillator value goes higher three times in a row. The third bar can be above the zero line. Similarly, when the Awesome Oscillator is above the zero line, the short entry signal is when the Awesome Oscillator value decreases three times in a row.

But hold on a minute, at the start of the video, I said an awesome oscillator is also used to find the trend direction. When Awesome Oscillator value is above the zero line, it is an uptrend, and when the Awesome Oscillator value is below the zero line, it’s a downtrend. Well yes, but that is a short term trend direction. Subscribers of the Trading Rush Channel know, that we buy and sell in the direction of the long term trend. If there is a long term uptrend going on, we don’t want to sell in the opposite direction of it. Similarly, if there is a long term downtrend going on, we don’t want to buy in the opposite of it. And finding the long term trend direction is easy. We will simply use the 200 E MA. And we will take buy entry signals given by the Awesome Oscillator, only if the entry signal is above the 200 E MA. And we will only sell, if the entry signal is below the 200 moving average.

Furthermore, in the long setup, we will set the stop loss below the pullback. And in the short setup, we will set the stop loss above the pullback.

So after taking 100 trades with this Awesome Oscillator Trading Strategy, here’s what I found out.

Number 1. Since we are entering at the third bar, and because we didn’t buy and sell immediately after the color change, a lot of false signals were filtered. But that wasn’t enough in some market conditions. You see, when the price movement is good, or in other words, when the candles are moving away from the previous candles, the awesome oscillator will give some of the best entry signals. But when they don’t move away from the previous candle, and most of the time they don’t, awesome oscillator bars change colors frequently. When this happened, some trades were won. And when the price got really choppy in the sideways market, Awesome Oscillator gave a lot of false entry signals in a row. In a range market, it is normal for a trend following strategy to give multiple false signals in a short period of time. But some strategies like the MACD or Ichimoku Cloud we have seen on the Trading Rush Channel, don’t give that many false signals in a range.

In the Trading Rush App, the win rate went up at the start, but then slowly went down, and went up, and down, and up. As you can see, the profit graph was not really consistent like some other strategies we have seen on this channel.

But after taking 100 trades with the Awesome Oscillator Trading Strategy, it got a 45 percent approximate win rate, which is more than what the Zero Line Awesome Oscillator got. And just like the previous Awesome Oscillator Trading Strategy, it made money, but the profit graph was not consistently going up in one direction like the profit graph of some other strategies we have seen. The awesome Oscillator lost 9 trades in a row, and won 6 times in a row.

And now, let’s give this Awesome Oscillator Strategy a Trading Rush Score.

It gets a 5 out of 10 in the win rate category. The win rate was profitable, but this strategy has a lot of potential, and you can increase the win rate by using some other indicators to filter the choppy and range market. I have already discussed a few indicators that can filter the range market, check them out to learn more.

In the easy to use category, it gets a 7.5 out of 10. All you have to do is look at the awesome oscillator bars, and enter when the Awesome Oscillator value goes higher or lower three times in a row.

In the reliability category, it gets a 4.2 out of 10. It gives too many false signals if the price movement is not good.

In the consistent profits category, it gets a 1 out of 10. The profit graph in the Trading Rush App was looking like a mess.

This Awesome Oscillator strategy is trying to give entry signals in the direction of the trend, and it does that job pretty good if the price movement is good. So it gets a 4.2 out of 10.

The only difference between this and previous Awesome Oscillator Strategy is that, the previous was giving late entry signals, and this one is sometimes giving too many signals because of the early signals.

So the TR Score is 21.9 out of 50. And it ranks 20th from the top, just after Golden Cross Trading Strategy, and before the Connors RSI trading Strategy.

And That’s all.

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Tag: awesome oscillator trading

Is the Awesome Oscillator really that awesome in trading? Can you actually make money with it as a trader? I mean it is a momentum indicator, and momentum indicator combined with the trend, have worked really well on the Trading Rush Channel. To find out if the Awesome Indicator works or not, I tested it 100 times. Furthermore, I got curios after seeing the results, and tested the MACD strategy 100 times again, to compare it with the awesome indicator. So in this video, I tested the Awesome Oscillator and the MACD strategy 100 times, and here’s what happened.

The Awesome Oscillator was created by Bill Williams, and you have probably heard this name before on this channel, because some of the useful indicators we have tested on the Trading Rush channel, were created by Bill Williams. The alligator indicator was one of them, and it is one of the most useful indicators to identify the trend. Awesome Oscillator is used to find the trend direction and the possible reversal points. It uses the simple moving averages to calculate its values, and calculates the difference of a 34 and 5 period Simple Moving Averages, but here’s a twist. Unlike the usual simple moving averages where values are calculated using the closing price of the candles, simple moving averages in the awesome oscillator uses the mid point of the candle to calculate it’s values.

This is how the Awesome Oscillator looks like on the TradingView Platform, and since the awesome oscillator is an oscillator, it oscillates between values that are above and below the zero line. At the first glance , an Awesome Oscillator looks very similar to the histogram of the MACD indicator. So will it work as good as the MACD strategy? In the Awesome Oscillator, a green bar appears if the value is higher than the previous value. And a red bar appears if the value is lower than the previous value. So when the Awesome Oscillator value is below the zero line, it indicates a downtrend. And if the Awesome Oscillator value is above the zero line, it indicates an uptrend, Simple as that.

Now, there are 3 popular trading strategies that are based around the Awesome Oscillator. In this video, the strategy that I have tested 100 times, is called the zero line cross. As you can tell by the name, this Awesome Oscillator Trading Strategy is really simple. The entry signal in the strategy is generated using the zero line of the Awesome Oscillator. The Buy signal is when the awesome oscillator crosses above the zero line, and the sell signal is when the awesome oscillator crosses below the zero line. Pretty straight forward, but if you have been watching the Trading Rush Channel for a while, you know that pretty straight forward strategies like these are not that good on their own, because they don’t consider the long term trend direction. So we will use the 200 exponential moving average with the awesome oscillator, to make sure we take entry signals only in the direction of the long term trend direction.

So here’s how the modified awesome oscillator trading strategy goes. The long entry signal is when the awesome oscillator crosses above the zero line, only if the entry candle is above the 200 period moving average. And the short entry signal is when the awesome oscillator crosses below the zero line, and if the entry candle is below the 200 period moving average. In this example, price was above the moving average which indicates an uptrend. In this uptrend, the awesome oscillator crosses above the zero line, so the long entry is at the closing price of the candle, and stop loss is below the pullback. In this short example, price was below the moving average which indicates a downtrend. And in this downtrend, the awesome oscillator crosses below the zero line, so the short entry is at the closing price of the candle, and stop loss is above the pullback of the trend.

So I tested the Awesome Oscillator, Zero Line Cross Trading Strategy 100 times, here’s what I found out.

Number 1. Now I test and have tested many different trading strategies on the same pair and on the same timeframe. Furthermore, I use the same 1.5 to 1 reward risk ratio, so when I test a new strategy, it is tested in almost the same market structure and conditions as the previous strategy. In the last testing video, I tested the fractal breakout strategy. Now, both the awesome oscillator, and the fractal breakout strategy, took their first few trades when the price was in a strong long term uptrend. If you look at the profit graph of the fractal trading strategy in the Trading Rush App, you will see that it went up, which means that the entry signals given by the fractal indicator were profitable. But if you look at the profit graph of the awesome oscillator in the Trading Rush App, you will notice that the awesome oscillator didn’t make much money in the same uptrend. Furthermore, the profit line instead of going up, went down. Why the awesome oscillator couldn’t make money like the fractal breakout strategy, even though the market conditions were almost the same? Well, while testing, I noticed that the awesome oscillator gives entry signals way too late. When I say way too late, I’m not exaggerating, because while testing, I realized that Awesome Oscillator gives entry signals similar to MACD trading strategy.

So I tested the MACD strategy 100 times, again, in the same market conditions, but this time, I didn’t follow all the MACD rules that I mentioned in the previous MACD videos. And after testing the MACD strategy in the same market conditions like the awesome oscillator, the MACD got a win rate of approximately 60 percent, whereas Awesome Oscillator only got a win rate of approximately 42 percent. MACD, without following all of its rules, still managed to get a win rate of 60 percent. Just don’t focus on the profit graph of the MACD this time, because I added trades in bulk to make testing faster. But after testing both MACD and Awesome Oscillator on the same market structure, I found out that the Awesome Oscillator gives way to late entry signals than the MACD signals. Just look at this example. Here, price is in a downtrend, but MACD and the awesome oscillator, give entry signals at very different points. One is way too late than the other. Because of the late signals, the probability of price reaching the 1.5 to 1 reward risk profit target becomes lower. Now one can say, if the price can’t reach the 1.5 to 1 reward ratio profit target easily, why not reduce the size of the stoploss, that way, we can achieve a good reward risk ratio even if the price makes a small move. Setting a smaller stop loss using the ATR indicator can be a good idea, and it can increase the win rate of this strategy, but the fact still says that the entry signals given by the awesome oscillator are late. Since there is a big difference between a 42 percent win rate, and the 60 percent win rate, you are always better off with a strategy that gives more than 60 percent win rate even with a 1.5 to 1 reward risk ratio.

In the Trading Rush App, the awesome oscillator didn’t make much profit, it got more losers in a row than the number of winners it got in row, and the profit graph also doesn’t look that good compared to some other trading strategies we have seen on the Trading Rush Channel. For example, here’s the profit graph of the original MACD strategy that followed all the MACD rules, as you can see, this is more consistent than the awesome oscillator achieved here. But, that’s just the zero line cross strategy. It made money in the end, but not like some other indicators. In the future videos, we will test the two other strategies that are also based on the Awesome Oscillator.