theforexwriter’s Weblog

I have become enamored of the accelerator oscillator. Although I’ve had little experience with it prior to this experiment, I’m finding that it has much to offer, warning me when the current microtrend is softening and preparing to pull back. For day trading, this allows me to enter the market as the microtrend reverses, ride it to its end, and then exit when it again pulls back. It’s not foolproof—at least not against this fool—but I’ve placed two trades using the system this week, both positive, for a total of around 50 pips.

Not a lot, no. I’ve been busy elsewhere and haven’t had a lot of time to put into forex trading this week. (Check out PickensPlan.com if you’re curious as to what has distracted me.) And I definitely missed some awesome trades that were clearly signaled, such as the illustration below. Note how the combination of the moving average crossovers, Dean Malone’s Trader’s Dynamic Index in the bottom indicator window, and the accelerator oscillator in the middle one all confirm each other going into that long upslope. Even this fool couldn’t have missed that one!

Note that what the accelerator oscillator measures is not the direction of the trend, nor even its strength, but its momentum. When the trend is moving hard and fast, the histogram bars become long, but when the price action is channeling without a lot of direction, they become short. This helps the forex trader to gauge whether a change in trend is an actual reversal (long bars, more than three or four of them grouped together) or just a pullback for profit taking (shorter bars and not as many of them).

Remember:

1. Have a strategy.
2. Plan your trade.
3. Trade your plan.
4. There’s no such thing as always.

More later. Happy trades to you.