Chaikin Oscillator

To date, a huge number of indicators are available to the trader, which are aimed at a certain type of trade. The standard set of trading tools is good, but you can always "protest" something new to boost the deal pro.




We present to you one of the tools called Chaikin oscillator (CHO), which is built by the difference between the value of the moving averages of the indicator "Accumulation/Distribution."


It has the following construction formula:




CHO = EMA (A/D, 3) - EMA (A/D, 10)



EMA - moving average;

A/D - readings of Accumulation/Distribution indicator.


This formula builds the known MACD indicator, but in contrast, Chaikin Oscillator is applied to the Accumulation/Distribution indicator to detect changes in the Accumulation/Distribution indicator.


CHO does not analyze the price, but determines the acceleration of the Accumulation/Distribution indicator, which is late. Hence ahead of the Accumulation/Distribution indicator.


How do I trade with an oscillator?


A key method of trading with Chaikin Oscillator is to identify Forex divergence.


Bull divergence - the price minimum changes, and the minimum indicator becomes higher than the previous one.


You can follow the discrepancies between Cheikin 's oscillator and the price. If we take as an example bullish divergence, it is short-term purchases on the chosen product pair. But it is necessary to buy when the acceleration of the cap is confirmed: the oscillator will pass the wash 0 from below. This indicates the signal of intersection of fast moving average and slow from bottom to top, which are formed on the basis of readings of indicator "Accumulation/Distribution."


The maximum divergence - the price maximum changes, and the maximum indicator becomes lower than the previous one.


This is a signal for possible sale on the pair you chose.


In a situation where you are seeing a difference in price and oscillator readings, you need to wait for the crossing of the Chaikin Oscillator zero line to open a profitable deal in the appropriate direction.


The oscillator functions more efficiently if combined with other trade instruments.


Trading with Chaikin Oscillator and 90-day moving average


This oscillator can be combined with a 90-day moving average. When the direction of the oscillator changes, it is a signal for sale/purchase, but taking into account the matching direction and price trend.



Signal: price increases and is located above 90-day moving average, oscillator reversal and will be a signal.


Signal no.: Price is lowered and located below the 90-day moving average, oscillator reversal and will be a signal.


Chaikin Oscillator advantages:



This indicator is faster than the Accumulation/Distribution indicator, allowing you to enter the market more accurately.

Adopted in trade strategies, in combination with other "traditional" instruments.

He does not draw his readings like many indicators.



Chaikin Oscillator shortcomings:



Excessive flexibility.

The indicator crosses the zero line too quickly, making it difficult to determine the entry point.

The oscillator should be combined with the oscillators to filter its data.



We recommend that you add a Bollinger lane indicator to your trading system.


Comments ()