Ultimate Oscillator MT4 Indicator – Free MT4 Indicator
The Ultimate Oscillator MT4 Indicator is not a very common oscillator, yet it can effectively be used to determine overbought and oversold levels on the chart, as well as to detect divergence. For calculation, the ultimate oscillator uses three time segments with different periods, for example: 7, 14 and 28 (the default setting). The value of the selected periods depends on the volatility of the currency pair, the selected timeframe and the forex strategy.
The Forex oscillators typically compare a smoothed price of a financial instrument and its value of n-periods ago. Larry Williams said that the effectiveness of these oscillators can vary greatly depending on the number of time periods taken for the calculation. So he developed the Ultimate Oscillator, which uses weighted sums of three oscillators with different calculation periods.
Larry Williams is the first to describe this oscillator in 1985 in “Technical Analysis of Stocks and Commodities” magazine. The indicator values range from 0 to 100, while the center is located at the level of 50. The oversold corresponds to values below the 30 and oversold – between 70 and 100.
The oscillator uses three time periods that can be set manually. Typically, these values are 7, 14 and 28. Note that the longer period includes the shorter one, meaning that the 28-period value already takes into account the 14- and 7-period. This means that the values of the shortest periods are used three times and therefore have the greatest influence on the oscillator results.
Now, let us try a simple strategy using this indicator.
Ultimate Oscillator MT4 Indicator – Chart Setup
The recommended time-frame is H1 and higher;
Choose the currency pairs from the majors at your discretion;
Here are the indicators you should set on the chart:
- Ultimate Oscillator with default settings: 7, 14, 28.
- An exponential moving average (EMA) with the period 12 (red);
- A simple moving average (SMA) with the period 55;
- Trading sessions – US and European trading sessions;
Ultimate Oscillator MT4 Indicator – Long Trading Rule
In an uptrend, when the EMA 12 crosses the SMA 55 from the bottom to top, wait for the Ultimate Oscillator indicator to turn back from its 30 level from below.
You should take the profit manually, and set the stop loss in a line with the regional low, or at 15 pips below the current price.
As Larry Williams recommends, you should close long positions when:
- The oscillator rose above 50 and then fell below 45;
- The oscillator rose above 70 (sometimes it is recommended to wait until it then drops below 70);
- Any other signal for sale is evident.
Ultimate Oscillator MT4 Indicator – Short Trading Rule
In a downtrend, when the EMA 12 crosses the SMA 55 from the top to bottom, wait for the Ultimate Oscillator to turn down from its 70 level from above.
As mentioned above, you should take the profit manually, and set the stop loss at the level of the regional peak, or 15 pips above the current price.
Close the short position if:
- The oscillator rose above 65;
- The oscillator fell below 30;
- Any signal to buy is evident.
Technically speaking, you can use this indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.
Trading with the Ultimate Oscillator MT4 Indicator
Trading with the Ultimate Oscillator MT4 Indicator Video Tutorial
Ultimate Oscillator MT4 Indicator Download
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