Get to Know More OSMA Indicators in Forex Trading
Get to Know More OSMA Indicators in Forex Trading – Forex trading is one of the investments that many people have seen lately. Foreign Exchange or commonly called Forex is an investment made by exchanging one foreign currency with another currency for the purpose of foreign payments. People who do forex trading are called traders. The advantage gained by traders is derived from differences in supply and demand at certain times and results in fluctuations in the values of the currency.
The number of success stories of traders in forex trading raises many novice investors who also intend to jump into this business. For beginners it may take extra effort to run forex trading because this business is not just about guessing the value but there are techniques and strategies that must also be known.Remember, this is business! One of the things that forex traders beginners can use to predict value is the OSMA Indicator.
OSMA indicator (Moving Average of Oscilator) can be used to find out the direction of movement in a currency pair that is displayed simply so that it is easy to understand. Even for MT4 trading platform users, traders can use it directly without having to download it first.
The OSMA indicator is also an oscillator type technical indicator that is calculated from the difference in long period Moving Average and short period Moving Average. This OSMA indicator can read the trend with quite high accuracy. Technically, OSMA will be calculated based on the difference between MACD lines and MACD signal lines and will be displayed like a histogram bar on MACD.
Traders will be helped by an oscillator that identifies oversold or oversold conditions and overbought or overbought conditions also confirm when the trend starts to change direction. The dynamics of the oscillator line movement up and down from center-line (0) is the main key. The closer the OSMA oscillator is at the upper limit, the greater the market conditions are approaching oversold as well as when the OSMA oscillator approaches the lower limit, overbought will occur.
For those of you beginner traders, this OSMA indicator is enough to know the signal condition for open as long as the trend takes place as its basic function or also as a divergent signal.
The downtrend condition also starts to appear to change when the oscillator starts moving past the center-line from below which is also confirmed when the candlestick surges from the upper limit of the channel trendline.
How to use the OSMA indicator
OSMA is a technical tool that will reflect the difference between Oscillator (MACD) and moving average (signal line). The OSMA formula is:
OSMA = MACD – signal
HOW TO INSTALL OSMA IN THE TRADING SOFTWARE METATRADER 4 AND METATRADER 5
- Enter through the Insert menu – select oscillator – then select Moving Average of Oscillator.
- OSMA will then be displayed as a histogram up or down with the main center-line or line 0 standard
- If the MACD is above the line (rising) means the OSMA value is positive and focus on the buy transaction
- Whereas if the MACD is below the signal line (down) then the OSMA value is negative and focus on sell transactions
- Remember, when the signal is in an unclear position between rising or falling it is better not to open a position. This is because transactions with large volumes are very dangerous. Also a valid time frame used is H1, but if you calculate long-term movements it is better to use a larger time frame.
Hopefully the information above is useful for all of you …