Bill Williams Awesome Oscillator Strategy – Big Profits, Small Losses

The trend break in the oscillator is your indication that buyers now dominate and an up move will begin.

Williams identified a buy signal a based on a bullish divergence and a sell signal based on a bearish divergence. The Awesome oscillator histogram should normally align with the price action. 

This indicates a change in momentum.

The Oscillator Problem 

Larry Williams' Ultimate Oscillator. I developed this trading and investing indicator in All oscillators essentially tell us the same thing; how price has performed over a .

When AO crosses above the Zero Line, short term momentum is now rising faster than the long term momentum. This can present a bullish buying opportunity. When AO crosses below the Zero Line, short term momentum is now falling faster then the long term momentum. This can present a bearish selling opportunity. Twin Peaks Twin Peaks is a method which considers the differences between two peaks on the same side of the Zero Line.

The second peak is higher than the first peak and followed by a green bar. Also very importantly, the trough between the two peaks, must remain below the Zero Line the entire time. The second peak is lower than the first peak and followed by a red bar. The trough between both peaks, must remain above the Zero Line for the duration of the setup.

The Saucer method looks for changes in three consecutive bars, all on the same side of the Zero Line. An oscillator will help show the speed at which the information is changing.

Thus, it can also define over-bought or over-sold areas. Taylor looked at price today versus a 7-day moving average of price or a 7-day moving average of advancing and declining stocks over the last seven days.

These two gentlemen, based in San Francisco, started running a cumulative positive-negative volume flow that was later popularized by Joe Granville. Woods and Vignolia also did a tremendous amount of oscillator work using 20 to day measurements of days that had up volume versus days that had down volume. The ability to construct oscillators improved substantially with the advent of the computer and especially small personal computers. That allowed the introduction of a new approach to oscillators going beyond a simple moving average.

The new trading crowd had been to college, had studied their math, and was suddenly flipping around words like exponentials, supersonic averages, front-end-weighted moving averages, lagged moving averages, rolling numbers, etc. This all reached its zenith in what has become one of the most widely known oscillators constructed by Wells Wilder: The Oscillator Opportunity The reason people have continued dabbling with oscillators is that they have the capability to give indications in advance of market turning points.

I wrote an article in for what was then known as Commodities magazine now Futures Magazine that showed an approach to oscillators in the pork belly and soybean oil market that actually led major tops and bottoms in the market. The trouble for most oscillator workers was, and has continued to be, that while frequently oscillators lead, sometimes they lead far too early and instead of buying a bottom, you are buying falling daggers and getting sliced up.

Even the best oscillators consistently give premature buy and sell signals. The Oscillator Problem The largest failure of oscillators is their inability to deal correctly with the time cycles involved. Let me explain that a bit. In other words, the type of moves the oscillator catches cannot, by definition, be much longer than the time period measured in the oscillator. Markets are so quick that anything using 30, 50, or 80 days does not respond quickly enough to get you in and out with profit.

One thing I noticed through the years is that the traditional short term oscillators, such as those featured in most trading and investing books, will turn very positive at the start of a major upmove in the market but quickly show divergence and overbought readings, causing most traders to sell short somewhere after the first leg of a bull market.

They then take a short position on the market and hold that short position in one form or another, actual outright short or afraid to purchase, for the next three or four legs of the bull market. That can be a costly experience. This happens because the time measurements in the oscillators they are following are too short-term in nature to catch a major move. All About the Ultimate Oscillator What is really needed is an oscillator that expands as the market gets stronger or weaker.

As an example, if the market shows a tremendous amount of strength your oscillator would expand the time base, thereby not allowing the short term fluctuation to influence the fact that the market has turned the corner on a long-term basis.

To capture this effect, I have included in the ultimate oscillator three different time cycles in the marketplace. Additionally, instead of measuring price, I believe it is more profitable to measure the amount of accumulation and distribution taking place in the market.

It Is About Time Time is one of the most critical elements in creating your oscillator. I have chosen three different time periods for the oscillator, three time cycles that generally have been the most dominant time cycles in the market.

The Awesome Oscillator indicator uses inbuilt default settings 5 vs. So, how does it work? Now, before we go any further, we always recommend to note down the trading rules on a piece of paper.

Check if the Awesome oscillator indicator is below zero First, we want to make sure the Awesome Oscillator indicator is below zero. This first rule is part of a three-rule pattern called the Awesome Oscillator Twin Peaks. This brings us to the next rule. Second, you need to check if here are two consecutive swing lows of the awesome oscillator histogram and the second low is higher than the first one.

These two swing will form the twin peaks and from here comes the term Awesome Oscillator Twin Peaks. There is one more rule for the Awesome oscillator Twin Peaks pattern to be validated. Here you go… Step 3: Check if the Awesome Oscillator Indicator histogram after the Second Low is Green We need the Awesome oscillator indicator histogram after the second low to immediately turn green.


The Oscillator Opportunity 

The Williams %R, developed by publisher Larry Williams, is a technical analysis oscillator. In practice, it compares a stock’s closing price .

Developed by Larry Williams, Williams %R is a momentum indicator that is the inverse of the Fast Stochastic referred to as %R, Williams %R reflects the level of the close relative to the highest high for the look-back period. Williams %R, or just %R, is a technical analysis oscillator showing the current closing price in relation to the high and low of the past N days (for a given N). It was developed by a publisher and promoter of trading materials, Larry Williams. 

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What is the 'Ultimate Oscillator'

Learn The Bill Williams Awesome oscillator strategy is a momentum strategy that seeks to take advantage of the most immediate trend. Larry Williams' Ultimate Oscillator. I developed this trading and investing indicator in All oscillators essentially tell us the same thing; how price has performed over a .

Ultimate Oscillator Gold Daily Bars After the divergence for a buy signal has occurred note the high in the oscillator prior to the low that set up the divergence. Once the Ultimate Oscillator rises above this peak you take a long position. Williams’ Percent Range Technical Indicator (%R) is a dynamic technical indicator, which determines whether the market is overbought/oversold. Williams’ %R is very similar to the Stochastic Oscillator.

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