V.7:6 (177-179): Speeding up the oscillator by Grady Garrett
Product Description
Speeding up the oscillator
by Grady Garrett
In 1986, I began a study of Standard & Poor's 100-stock Index (OEX) in search of a reliable mechanical trading indicator. This was a volatile time for the OEX— the bull market was getting its second wind and I idealistically looked for something to help pick tops and bottoms.
A popular and time-tested study is the moving average oscillator, which is simply a histogram of the difference between a fast (shorter-period) moving average and a slow (longer-period) moving average, either simple or exponential.
The classic method to trade the oscillator is to enter long on positive crossovers when the fast-moving average crosses above the slower-moving average and to exit long on negative crossovers. For my research, I assumed the trader was always in the market, so that exiting long implied entering short and vice versa. This type of system generally works best in slow-trending markets and seems to become inefficient in very volatile markets that frequently change direction.
In 1986, I began a study of Standard & Poor's 100-stock Index (OEX) in search of a reliable mechanical trading indicator. This was a volatile time for the OEX— the bull market was getting its second wind and I idealistically looked for something to help pick tops and bottoms.
A popular and time-tested study is the moving average oscillator, which is simply a histogram of the difference between a fast (shorter-period) moving average and a slow (longer-period) moving average, either simple or exponential.
The classic method to trade the oscillator is to enter long on positive crossovers when the fast-moving average crosses above the slower-moving average and to exit long on negative crossovers. For my research, I assumed the trader was always in the market, so that exiting long implied entering short and vice versa. This type of system generally works best in slow-trending markets and seems to become inefficient in very volatile markets that frequently change direction.
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |