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The Average Sentiment Oscillator indicator, which can also be known as ASO, is one of the versions of the Sentiment indicator using values smoothing. Calculations of the indicator are aimed at determining the current market trend and opening trades in this period. The Average Sentiment Oscillator indicator is displayed in the lower window of the price chart in the form of two intersecting lines and signal levels. To determine the current trend and open certain trades, one should take into account the intersection of the indicator lines with each other and their location relative to the signal levels.
The Average Sentiment Oscillator indicator is suitable for trading any currency pairs, on any timeframe.
Input parameters
There are several sections in the settings of the Average Sentiment Oscillator indicator. The Input Parameters section is responsible for its technical operation, while the Colors section is used to change its visualization, namely the color and thickness of the lines. To add signal levels to the indicator window, use the Levels section.
-Range period - value of the indicator period. The default value is 10.
-Smoothing period - the period for smoothing the indicator values. The default value is 10.
-Method - type of indicator calculation smoothing. The default value is Simple.
-Mode - type of using the indicator lines relative to each other. The default value is Combined.
Indicator signals
To open a certain trade using the Average Sentiment Oscillator indicator, its current values should be taken into account, namely the intersection of lines between each other, their general location relative to signal levels. If the current market trend is upward, long positions are opened, if the trend is downward, short positions are opened. Trades are closed when the trend direction changes.
Signal for Buy trades:
- The indicator lines intersect so that the fast line is higher than the slow one and above the signal level of 100.
Upon receipt of such a condition, a buy trade may be opened on the signal candle due to the presence of an uptrend in the current market. It should be closed upon receipt of the opposite condition from the indicator, namely at the next intersection of the lines. At this moment, a change in the current trend is possible, which will allow considering the opening new trades.
Signal for Sell trades:
- The indicator lines intersect so that the slow line is above the fast line and signal level 0.
A sell trade can be opened immediately upon receipt of such conditions characterizing the presence of a downward trend in the current market. Upon receipt of the opposite conditions characterizing a change in the current trend, the current trade should be closed and opening new ones should be considered.
Conclusion
The Average Sentiment Oscillator indicator is effective, especially if it is used in trading strategies with additional indicators, filters and expert advisors. For the correct application of the trading algorithm, it is recommended to use a demo account before trading on a real deposit.
