Average Sentiment Oscillator Indicator For MT4
Table Of Contents:
- Average Sentiment Oscillator Indicator For MT4
- Understanding the Algorithm
- How to Tweak the Indicator Parameters
- How to Interpret Trading Signals
- Drawbacks of Using ASO Indicator
- Conclusion
Market success is derived from constant practice, an achievement that can be derived from testing different technical indicators, and one of such is the Average Sentiment Oscillator Indicator For MT4. Traders use this tool to gauge the overall market climate and to get a better understanding of things. The Average Sentiment Oscillator offers a dynamic medium in which the average bull/bear percentages are entirely captured. The indicator is an upgrade on the formula deployed for the sentiment meter module found on the FX Multimeter III indicator.
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Alerts In Real-Time When Divergences Occur
It is advisable that traders deploy the Average Sentiment Oscillator Indicator For MT4 if they want to accurately measure the market’s current sentiment, its trend attributes or even entry/exit triggers.
Understanding the Algorithm
The Average Sentiment Oscillator Indicator For MT4 is made up of two very similar algorithms, that are applied dissimilarly. The first algo studies each bar's bullish or bearishness via the OHLC price bar, and it then computes the mean of all percentages present in the designated bars timeframe to arrive at the closing percentage value. The second algorithm studies the designated bars' timeframe as a single unit and tries to gauge the percentage sentiment using the OHLC points of the bar set. We tend to get a more precise intra-bar sentiment, coupled with increased randomness when considering the first algorithm, however, more weight gets added to the price set movement, alongside a smoother yield when considering the second algorithm.
How to Tweak the Indicator Parameters
There are four inputs variable parameters found on the Average Sentiment Oscillator Indicator For MT4 and with this, you can take ownership of this amazing tool. Altering the value of the “AsoPeriod” affects the indicator’s sensitivity or smoothness. The indicator tends to react faster to disruptions in price action when the “AsoPeriod” value decreases (making it more suitable for trading on lower time frames), and reacts slower when the “AsoPeriod” value increases (making it more appropriate for trading on higher time frames).
Upon activation, the Average Sentiment Oscillator Indicator For MT4 gets added to the trading chart, wrapped in a separate window, in the form of red and royal blue lines that oscillate around the 50.00 level. The lowest and highest points on the indicator are 0 and 100 respectively.
Other input variables that are seen on the Average Sentiment Oscillator Indicator For MT4 includes the “Mode,” “Bulls” and “Bears.” The value of the “Mode” variable can only swing between 0, 1 and 2, where Mode 0 typifies the use of the combined algorithm, while Mode 1 and Mode 2 separately defines the two algorithms within the ASO indicator.
How to Interpret Trading Signals
Deciphering trading signals on the Average Sentiment Oscillator Indicator For MT4 is quite straightforward, and requires no form of specialized training at all. However, to be able to quickly spot changing trends, watch out for when the royal blue (Bulls) line crosses above the red (Bear) line, while the royal blue line stays above the 50.00 level, as a trigger to go long. Conversely, when the red line crosses above the royal blue, while also aligning above the 50.00 level, it is signaling a bearish trend.
Displayed on the left upper side window of the Average Sentiment Oscillator Indicator For MT4 is a set of information that looks like this; ASO(10) 53.4017 46.5983 (although subject to changes). The first part [ASO(10)] defines the value of the AsoPeriod, which comes preinstalled with a default value of 10. The accompanying decimals represent the values of the Bulls and Bears, a number that reflects the current positions of the royal blue and red lines within the indicator window, relative to the 50.00 horizontal level.
When the Bulls value is greater than the Bears value, it is signaling a bullish trend, while if the Bears value surpasses those of the Bulls, it is a signal to go bearish. When both lines travel in close proximity to each other, along the 50.00 horizontal level, it typifies a range-bound market condition.
It is also possible to deploy the Average Sentiment Oscillator Indicator For MT4 in trading overbought/oversold markets in a manner that resembles the RSI and Stochastic indicators. This is achieved by setting horizontal lines on the 70.00 and 30.00 marks. Therefore when the royal blue line spikes above the 70.00 level, the market is said to be overbought, while an oversold market is registered when the red line dips below the 30.00 level. The rule of the thumb with most indicators shows that a smaller period leads to more noise, while a larger period gives less false positives.
The width of the oscillator indicator widens when the fixed minimum and maximum values get modified to 20 and 80. I’ll recommend an improvement from the 20 and 80 fixed minimum and maximum values with the 11.4 and 78.6 levels.
Drawbacks of Using ASO Indicator
Despite the uniqueness of the Average Sentiment Oscillator Indicator For MT4, it parades just a handful of Input Variables, thereby minimizing the trader’s customizable options. The indicator performs poorly as a standalone technical tool, but to compensate for this, it filters out bogus entries when in use with other technical indicators.
Conclusion
The Average Sentiment Oscillator Indicator For MT4 is beneficial to your trading experience not just for its straightforwardness, but also because of its flexibility with other technical indicators. You don’t need to spend countless hours trying to master this indicator. All you need is just a few minutes of your time to fully grasp its workings. This could be the perfect tool for your day trading, as it gives some of the best medium- and long-term signals.
