OSCILLATOR TRADING SYSTEMS DEFINED by Technical Analysis, Inc.
An oscillator is an indicator that moves back and forth between two limits. Most oscillators, such as
stochastics, relative strength index and commodity channel index, are defined so that they range between
0 and 100 or -100 and +100.
Usually, an oscillator is interpreted by watching for crossovers; that is, when the indicator crosses a given
level (such as 20 or 80 for stochastics), a buy or sell signal is generated. The problem with crossover
systems is that they are usually late — by the time the indicator penetrates the trigger level, the price has
already advanced 50% or more of its move.