Ultimate oscillator

Last updated

The ultimate oscillator is a theoretical concept in finance developed by Larry Williams as a way to account for the problems experienced in most oscillators when used over different lengths of time. [1]

Ultimate oscillator Ultimate oscillator.jpg
Ultimate oscillator

The oscillator is a technical analysis indicator based on a notion of buying or selling "pressure" represented by where a day's closing price falls within the day's true range.

The calculation starts with "buying pressure", which is the amount by which the close is above the "true low" on a given day. The true low is the lesser of the given day's trading low and the previous close.

The true range (the same as used in average true range) is the difference between the "true high" and the true low above. The true high is the greater of the given day's trading high and the previous close.

The total buying pressure over the past 7 days is expressed as a fraction of the total true range over the same period. If is today, is yesterday, etc., then

The same is done for the past 14 days and past 28 days and the resulting three ratios combined in proportions 4:2:1, and scaled to make a percentage 0 to 100. The idea of the 7-, 14- and 28-day periods is to combine short, intermediate and longer time frames.

Williams had specific criteria for a buy or sell signal. A buy signal occurs when,

The position is closed when the oscillator rises above 70 (considered overbought), or a rise above 50 but then a fallback through 45.

Ultimate oscillator divergence bullish Ultimate oscillator divergence bullish.jpg
Ultimate oscillator divergence bullish
Ultimate oscillator divergence bearish Ultimate oscillator divergence bearish.jpg
Ultimate oscillator divergence bearish

A sell signal is generated conversely on a bearish divergence above level 70, to be subsequently closed out below 30 (as oversold).[ citation needed ]

Related Research Articles

A Costas loop is a phase-locked loop (PLL) based circuit which is used for carrier frequency recovery from suppressed-carrier modulation signals and phase modulation signals. It was invented by John P. Costas at General Electric in the 1950s. Its invention was described as having had "a profound effect on modern digital communications". The primary application of Costas loops is in wireless receivers. Its advantage over other PLL-based detectors is that at small deviations the Costas loop error voltage is as compared to . This translates to double the sensitivity and also makes the Costas loop uniquely suited for tracking Doppler-shifted carriers especially in OFDM and GPS receivers.

Phase-locked loop electronic circuit

A phase-locked loop or phase lock loop (PLL) is a control system that generates an output signal whose phase is related to the phase of an input signal. There are several different types; the simplest is an electronic circuit consisting of a variable frequency oscillator and a phase detector in a feedback loop. The oscillator generates a periodic signal, and the phase detector compares the phase of that signal with the phase of the input periodic signal, adjusting the oscillator to keep the phases matched.

Resonance phenomenon in which a vibrating system or external force drives another system to oscillate with greater amplitude at specific frequencies

Resonance describes the phenomenon of increased amplitude that occurs when the frequency of a periodically applied force is equal or close to a natural frequency of the system on which it acts. When an oscillating force is applied at a resonant frequency of a dynamical system, the system will oscillate at a higher amplitude than when the same force is applied at other, non-resonant frequencies.

A low-pass filter (LPF) is a filter that passes signals with a frequency lower than a selected cutoff frequency and attenuates signals with frequencies higher than the cutoff frequency. The exact frequency response of the filter depends on the filter design. The filter is sometimes called a high-cut filter, or treble-cut filter in audio applications. A low-pass filter is the complement of a high-pass filter.

Pulse-width modulation modulation technique

Pulse-width modulation (PWM), or pulse-duration modulation (PDM), is a method of reducing the average power delivered by an electrical signal, by effectively chopping it up into discrete parts. The average value of voltage fed to the load is controlled by turning the switch between supply and load on and off at a fast rate. The longer the switch is on compared to the off periods, the higher the total power supplied to the load. Along with maximum power point tracking (MPPT), it is one of the primary methods of reducing the output of solar panels to that which can be utilized by a battery. PWM is particularly suited for running inertial loads such as motors, which are not as easily affected by this discrete switching, because their inertia causes them to react slowly. The PWM switching frequency has to be high enough not to affect the load, which is to say that the resultant waveform perceived by the load must be as smooth as possible.

Relaxation oscillator Electronic oscillator circuit that produces a nonsinusoidal repetitive output signal

In electronics a relaxation oscillator is a nonlinear electronic oscillator circuit that produces a nonsinusoidal repetitive output signal, such as a triangle wave or square wave. The circuit consists of a feedback loop containing a switching device such as a transistor, comparator, relay, op amp, or a negative resistance device like a tunnel diode, that repetitively charges a capacitor or inductor through a resistance until it reaches a threshold level, then discharges it again. The period of the oscillator depends on the time constant of the capacitor or inductor circuit. The active device switches abruptly between charging and discharging modes, and thus produces a discontinuously changing repetitive waveform. This contrasts with the other type of electronic oscillator, the harmonic or linear oscillator, which uses an amplifier with feedback to excite resonant oscillations in a resonator, producing a sine wave. Relaxation oscillators are used to produce low frequency signals for applications such as blinking lights(turn signals) and electronic beepers and in voltage controlled oscillators (VCOs), inverters and switching power supplies, dual-slope analog to digital converters, and function generators.

Negative resistance the property that an increasing voltage results in a decreasing current

In electronics, negative resistance (NR) is a property of some electrical circuits and devices in which an increase in voltage across the device's terminals results in a decrease in electric current through it.

The relative strength index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.

In telecommunications, particularly in radio frequency, signal strength refers to the transmitter power output as received by a reference antenna at a distance from the transmitting antenna. High-powered transmissions, such as those used in broadcasting, are expressed in dB-millivolts per metre (dBmV/m). For very low-power systems, such as mobile phones, signal strength is usually expressed in dB-microvolts per metre (dBμV/m) or in decibels above a reference level of one milliwatt (dBm). In broadcasting terminology, 1 mV/m is 1000 μV/m or 60 dBμ.

MACD trading indicator used in technical analysis

MACD, short for moving average convergence/divergence, is a trading indicator used in technical analysis of stock prices, created by Gerald Appel in the late 1970s. It is designed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock's price.

The money flow index (MFI) is an oscillator that ranges from 0 to 100. It is used to show the money flow over several days.

Williams %R, or just %R, is a technical analysis oscillator showing the current closing price in relation to the high and low of the past N days. It was developed by a publisher and promoter of trading materials, Larry Williams. Its purpose is to tell whether a stock or commodity market is trading near the high or the low, or somewhere in between, of its recent trading range.

On-balance volume (OBV) is a technical analysis indicator intended to relate price and volume in the stock market. OBV is based on a cumulative total volume.

The commodity channel index (CCI) is an oscillator originally introduced by Donald Lambert in 1980.

The accumulation/distribution line or accumulation/distribution index is a technical analysis indicator intended to relate price and volume in the stock market and acting as a leading indicator of price movements.

Average true range (ATR) is a technical analysis volatility indicator originally developed by J. Welles Wilder, Jr. for commodities. The indicator does not provide an indication of price trend, simply the degree of price volatility. The average true range is an N-period smoothed moving average (SMMA) of the true range values. Wilder recommended a 14-period smoothing.

Keltner channel

Keltner channel is a technical analysis indicator showing a central moving average line plus channel lines at a distance above and below. The indicator is named after Chester W. Keltner (1909–1998) who described it in his 1960 book How To Make Money in Commodities. This name was applied by those who heard about it from him, but Keltner called it the ten-day moving average trading rule and indeed made no claim to any originality for the idea.

In technical analysis of securities trading, the stochastic oscillator is a momentum indicator that uses support and resistance levels. Dr. George Lane developed this indicator in the late 1950s. The term stochastic refers to the point of a current price in relation to its price range over a period of time. This method attempts to predict price turning points by comparing the closing price of a security to its price range.

In financial technical analysis, the know sure thing (KST) oscillator is a complex, smoothed price velocity indicator developed by Martin J. Pring.

Chaikin Analytics

Chaikin Analytics is a stock trading idea platform. It was founded in 2011 by Marc Chaikin. The centerpiece of Chaikin Analytics is the Chaikin Power Gauge stock rating. In 2016 it was named one of "Two Top Websites for Quantitative Analysis" by Barron's (newspaper).

References

Further reading