Oscillators Explained
Oscillators are a group of indicators
that confine the theoretically infinite range of the price action into more
practical limits. They were developed due to the difficulty of identifying a
high or low value in the course of trading. Although we may have mental
concepts of what is high or low in a typical day's price action, the volatile
and chaotic nature of trading means that any high can easily be superseded by
another one that sometimes follows on the heels of a previous record, and
negates it swiftly. In short, practice and experience tell us that prices in
themselves are very poor guides on what constitutes an extreme value in the
market, and. oscillators aim to solve this problem by identifying indicator
levels that hint at tops or bottoms, and helping us in the decision process.
..............................................................................to be continued...
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