In the vast ocean of financial market analysis, there exists a powerful current known as the Accelerator Oscillator. This tool, often overlooked by novices, is a seasoned navigator’s secret weapon, guiding traders through the turbulent waves of market trends and price movements. This comprehensive guide aims to demystify the Accelerator Oscillator, shedding light on its purpose, calculation, and application in trading. Whether you’re a seasoned trader or a curious newcomer, this guide will equip you with the knowledge to harness the power of the Accelerator Oscillator, steering your trading ship towards the shores of success. So, let’s set sail and explore the depths of this fascinating indicator together.
The Basics of Accelerator Oscillator
What is an accelerator oscillator?
The Accelerator Oscillator is a technical analysis tool that aims to signal changes in market momentum before they occur in the price. It was developed by renowned trader and analyst Bill Williams as part of his unique approach to trading, which he referred to as “Trading Chaos”.
The Accelerator Oscillator is based on the concept that the driving force (acceleration) must precede the speed (price action) in order for the market to continue moving in the same direction. In other words, any change in market momentum is usually a precursor to a change in price.
This oscillator fluctuates around a zero line, with positive values indicating bullish momentum and negative values indicating bearish momentum. A positive value suggests that the market is accelerating upwards, while a negative value suggests that the market is accelerating downwards.

The Accelerator Oscillator is particularly useful in markets where the trend is not clear. It can help traders identify potential turning points and can also be used in conjunction with other indicators to confirm trading signals.
In essence, the Accelerator Oscillator is a tool that helps traders anticipate changes in price direction, providing them with the opportunity to react before the rest of the market. This makes it a valuable addition to any trader’s toolkit.
How does accelerator oscillator work?
The Accelerator Oscillator operates on the principle that momentum changes precede price changes. It’s a tool that oscillates around a zero line, providing insights into market acceleration. Here’s how it works:
Acceleration and Deceleration: The Accelerator Oscillator measures the difference between the Awesome Oscillator and the 5-period moving average, highlighting the acceleration or deceleration of the market. Positive readings indicate acceleration in upward momentum, while negative readings signal acceleration in downward momentum.
Zero Line Crossings: When the Accelerator Oscillator crosses above the zero line, it suggests that it’s an optimal time to buy. Conversely, when it crosses below the zero line, it may be a good time to sell.
Color Changes: The color of the bars can also provide trading signals. If the current bar is green and higher than the previous one, it’s a buying signal. If the current bar is red and lower than the previous one, it’s a selling signal.
Remember, the Accelerator Oscillator should be used in conjunction with other indicators for confirmation to increase the reliability of the signals. It’s a powerful tool that, when used correctly, can provide valuable insights into market dynamics.
What is the purpose of the oscillator?
The Accelerator Oscillator serves as a crucial tool for traders and investors, providing valuable insights into market dynamics. Its primary purpose is to identify potential changes in price momentum, even before the price movement itself becomes evident.
The oscillator achieves this by comparing the current market momentum with the general momentum over a certain period. When the Accelerator Oscillator is positive, it suggests that the market momentum is accelerating, indicating a potential upward price movement. Conversely, a negative Accelerator Oscillator implies decelerating momentum, signaling a possible downward price movement.
By helping traders anticipate changes in price trends, the Accelerator Oscillator allows them to make informed decisions, potentially maximizing their profits and minimizing their risks in volatile markets. Thus, it plays a pivotal role in effective trading strategy formulation.
Exploring TD365: A High Leverage CFD Broker
TD365, also known as Trade Direct 365, is a Contract for Difference (CFD) broker that is recognized for its high leverage offering. This feature empowers traders to control larger positions with a smaller amount of capital.
Operating under the Finsa Group, TD365 has a presence in the UK, Australia, and South Africa. It provides attractive trading conditions, such as spreads as low as 0.6 pips and a leverage of 1:200. The absence of a minimum deposit requirement makes it accessible to traders with various budget levels.
TD365 sets itself apart with its commitment to customer service. The broker has garnered positive reviews for its responsive and professional customer service team. Traders frequently commend the broker for its swift response times and seamless account opening process.
A significant aspect of TD365 is its association with professional trader Tom Hougaard, also known as Trader Tom. Tom Hougaard uses TD365 for his trades and has demonstrated substantial profits in his TD account. His endorsement lends credibility to the broker and instills a sense of trust and reliability in potential users.
Our blog’s broker review of TD365 offers a deeper exploration into the features and benefits of this broker. It also provides a comparative analysis of TD365 with other brokers in the market, equipping you with a comprehensive understanding to make an informed decision.
TD365, with its competitive trading conditions, excellent customer service, and the endorsement of a professional trader, presents itself as a compelling choice for traders seeking a reliable and efficient trading platform.
Calculating the Accelerator Oscillator
How do you calculate the accelerator oscillator?
The Accelerator Oscillator (AC) is a technical indicator developed by Bill Williams that aims to identify points of market equilibrium and predict future price changes. The calculation of the Accelerator Oscillator involves several steps:
1. Calculate the Awesome Oscillator (AO): The AO is the difference between a 5-period simple moving average (SMA) and a 34-period SMA, both based on the midpoint of each bar ((High+Low)/2).
2. Calculate the Acceleration/Deceleration Oscillator (AC): The AC is the 5-period SMA of the AO subtracted from the 34-period SMA of the AO.
The formula can be represented as follows:
AC = SMA(AO,5) – SMA(AO,34)
Where:
- SMA is the Simple Moving Average
- AO is the Awesome Oscillator
The Accelerator Oscillator fluctuates around a zero line, representing the market equilibrium. Positive values suggest that the market momentum is accelerating, while negative values indicate deceleration. By observing these changes, traders can anticipate potential reversals and adjust their trading strategies accordingly.
Remember, while the Accelerator Oscillator can be a powerful tool, it should be used in conjunction with other indicators and analysis methods for more reliable trading signals. Always consider the overall market conditions and your personal risk tolerance when making trading decisions.
Advantages and Disadvantages
What are the advantages of accelerator oscillator?
The Accelerator Oscillator (AC) offers several advantages that make it a valuable tool for traders:
1. Early Signal Generation: The AC is designed to identify changes in market momentum before they reflect in the price action. This early signal generation can provide traders with a head start, allowing them to position their trades advantageously.
2. Versatility: The AC can be used in various market conditions and across different timeframes. Whether you’re a day trader looking at minute charts or a long-term investor analyzing weekly charts, the AC can provide useful insights.
3. Ease of Interpretation: The AC oscillates around a zero line, making it relatively easy to interpret. Positive values indicate accelerating momentum (bullish signal), while negative values suggest decelerating momentum (bearish signal).
4. Useful in Range-Bound Markets: In markets where price is moving sideways (range-bound markets), momentum indicators like the AC can be particularly useful. They can help identify potential breakouts or breakdowns before they occur.
5. Enhances Risk Management: By providing early signals of potential trend reversals, the AC can help traders manage their risk more effectively. Traders can set stop-loss orders or exit positions based on the signals from the AC.
6. Complements Other Indicators: The AC can be used in conjunction with other technical analysis tools and indicators to confirm signals and increase the robustness of a trading strategy.
While the Accelerator Oscillator has these advantages, it’s important to remember that no indicator is foolproof. It should be used as part of a comprehensive trading strategy that includes risk management and considers the broader market context.
What are the disadvantages of accelerator oscillator?
While the Accelerator Oscillator (AC) is a valuable tool for traders, it’s important to be aware of its limitations:
1. False Signals: Like all technical indicators, the AC can generate false signals. This means it might indicate a change in momentum that doesn’t result in a significant price movement. Traders relying solely on the AC might make trades based on these signals, potentially leading to losses.
2. Lagging Indicator: Although the AC is designed to provide early signals, it is still a lagging indicator. This means it relies on past price data and may not always accurately predict future price movements.
3. Complexity: While the AC is relatively straightforward to interpret, understanding how it’s calculated and how to use it effectively in trading can be complex for beginners.
4. Not Suitable for All Market Conditions: The AC is most effective in trending markets and can be less reliable in choppy or flat markets. Traders need to be aware of the current market conditions when using the AC.
5. Risk of Overleveraging: The AC can sometimes encourage overtrading or overleveraging, as traders might be tempted to enter trades based on minor fluctuations indicated by the AC.
6. Dependency on Other Indicators: The AC is typically used in conjunction with other indicators for confirmation. Relying on the AC alone might not provide a comprehensive view of the market.
Remember, no single indicator should be used in isolation. A comprehensive trading strategy should incorporate multiple indicators, risk management techniques, and an understanding of the broader market context.
Introducing Eightcap: A High Leverage CFD Broker
Eightcap, a Contract for Difference (CFD) broker, is a notable player in the trading landscape, particularly for its high leverage offering. This feature allows traders to control larger positions with a smaller amount of capital, amplifying potential profits while also increasing risk.
Operating globally, Eightcap is part of a well-regulated network, ensuring a secure trading environment for its clients. It offers competitive trading conditions, including low spreads and a reasonable minimum deposit requirement, making it accessible to traders with various budget levels.
One of the standout aspects of Eightcap is its commitment to customer service. The broker has received positive reviews for its responsive and professional customer service team. Traders frequently commend the broker for its swift response times and seamless account opening process.
In our blog’s broker review of Eightcap, we delve deeper into the features and benefits of this broker. We also discuss how Eightcap compares to other brokers in the market, providing you with a comprehensive understanding to make an informed decision.
Eightcap, with its competitive trading conditions, excellent customer service, and high leverage offering, presents itself as a compelling choice for traders seeking a reliable and efficient trading platform.
Practical Application
How to add Bill Williams Accelerator Oscillator to Metatrader 4?
Here is a step-by-step guide on how to add the Bill Williams Accelerator Oscillator to your Metatrader 4 platform:
Step 1. Open Metatrader 4: Start by launching your Metatrader 4 application.
Step 2. Navigate to the ‘Navigator’ window: On the left side of the platform, you’ll find the ‘Navigator’ window. If it’s not visible, you can open it by clicking on `View` in the menu bar and then selecting `Navigator`, or by using the shortcut `Ctrl+N`.
Step 3. Find ‘Bill Williams’ indicators: In the ‘Navigator’ window, scroll down until you find the ‘Indicators’ folder. Expand this folder and then expand the ‘Bill Williams’ subfolder.
Step 4. Select the Accelerator Oscillator: In the ‘Bill Williams’ subfolder, you’ll find the ‘Accelerator Oscillator’. Click on it to select it.
Step 5. Add the Accelerator Oscillator to the chart: Drag and drop the ‘Accelerator Oscillator’ onto the chart of the asset you want to analyze. Alternatively, you can right-click on the ‘Accelerator Oscillator’, select ‘Attach to a chart’, and then choose the appropriate chart.
Step 6. Adjust the settings (if necessary): A window will pop up with the settings for the Accelerator Oscillator. You can adjust these settings if necessary, or leave them at their default values. Click ‘OK’ to close the window.
Step 7. Confirm the Accelerator Oscillator is visible: The Accelerator Oscillator should now be visible at the bottom of your chart. If it’s not, make sure the ‘Chart’ window is selected and then click `Charts` in the menu bar followed by `Indicators List`. Check that the ‘Accelerator Oscillator’ is listed and that its ‘Visible’ box is checked.
And that’s it! You’ve successfully added the Bill Williams Accelerator Oscillator to your Metatrader 4 platform. Remember, this oscillator can help you identify potential changes in market momentum, but it should be used in conjunction with other indicators and analysis methods for the most reliable trading signals. Happy trading!
How do you trade with an accelerator oscillator?
Trading with the Accelerator Oscillator (AC) involves observing the oscillator’s behavior relative to the zero line and looking for specific patterns. Here’s a step-by-step guide on how to trade with the AC:
1. Identify the Zero Line Cross: The most basic trading signal with the AC is when it crosses the zero line. A cross from below to above the zero line is a bullish signal, indicating it might be a good time to enter a long position. Conversely, a cross from above to below the zero line is a bearish signal, suggesting it might be a good time to enter a short position.
2. Look for Divergence: Divergence occurs when the price of an asset is moving in the opposite direction of the AC. For example, if the price is making higher highs while the AC is making lower highs, this is known as bearish divergence and could indicate an upcoming price drop. On the other hand, if the price is making lower lows while the AC is making higher lows, this is known as bullish divergence and could signal an upcoming price rise.
3. Observe the Color Changes: The AC changes color based on its direction. If the AC is above the zero line and changes from green to red, it indicates that the positive momentum is losing strength and could be a signal to sell. If the AC is below the zero line and changes from red to green, it suggests that the negative momentum is losing strength and could be a signal to buy.
4. Use in Conjunction with Other Indicators: The AC can be used in conjunction with other technical analysis tools and indicators to confirm signals and increase the robustness of a trading strategy. For example, you might use the AC together with a trend indicator like the Moving Average to confirm the direction of the trend.
Remember, while the AC can provide valuable insights, it’s not infallible and should not be used in isolation. Always consider the overall market conditions, use proper risk management techniques, and test any new strategies in a demo account before applying them to live trading.
How do you use an oscillator for day trading?
Oscillators can be a valuable tool for day traders as they provide insights into market momentum and potential reversals. Here’s a step-by-step guide on how to use an oscillator for day trading:
1. Choose the Right Oscillator: There are several types of oscillators available, such as the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and the Accelerator Oscillator. Each has its own strengths and weaknesses, so choose one that suits your trading style and strategy.
2. Understand the Oscillator: Before you start trading, make sure you understand how your chosen oscillator works, what its values mean, and how to interpret its signals. This will usually involve studying the oscillator’s formula and reading up on trading strategies that use it.
3. Apply the Oscillator to Your Chart: Most trading platforms will allow you to apply an oscillator directly to your chart. This usually involves selecting the oscillator from a menu and setting any parameters it might have.
4. Interpret the Signals: Once the oscillator is applied to your chart, it will start generating signals. These can take several forms, depending on the oscillator. For example, the RSI generates signals when it crosses above 70 (overbought) or below 30 (oversold). The MACD generates signals when its two lines cross each other.
5. Plan Your Trades: Use the signals generated by the oscillator to plan your trades. For example, if the RSI crosses above 70, you might plan to sell once it crosses back below 70. Remember to also consider other factors like price action and market news when planning your trades.
6. Manage Your Risk: Always use proper risk management techniques when trading. This might involve setting stop-loss orders, only risking a small percentage of your trading capital on each trade, and regularly reviewing your trading performance.
Remember, while oscillators can provide valuable insights, they’re not infallible and should not be used in isolation.
A Closer Look at BlackBull Markets: A TradingView Integrated Broker
BlackBull Markets, a Contract for Difference (CFD) broker that stands out for its integration with TradingView, a professional charting and trading platform. This feature can be a powerful tool for traders, allowing them to leverage TradingView’s advanced charting tools directly from their BlackBull Markets account.
BlackBull Markets is a New Zealand-based forex broker known for its low forex fees and user-friendly account opening process. It offers over 26,000+ tradable instruments, including Forex, Index, Single Stock and Crypto CFDs, Commodities, Precious Metals, and Energy.
One of the unique offerings of BlackBull Markets is its partnership with TradingView. Traders who trade one lot per month with BlackBull Markets can benefit from free access to the premium package, TradingView Pro. This provides traders with access to additional features and functionalities that are not available in the free version of TradingView.
In our blog’s broker review of BlackBull Markets, we delve deeper into the features and benefits of this broker. We also discuss how BlackBull Markets compares to other brokers in the market, providing you with a comprehensive understanding to make an informed decision.
BlackBull Markets, with its competitive trading conditions, excellent customer service, and integration with TradingView, presents itself as a compelling choice for traders seeking a reliable and efficient trading platform.
As we wrap up our comprehensive guide on understanding the Accelerator Oscillator Indicator, it’s important to remember that this is just one tool in a trader’s arsenal. To further enhance your trading strategies and make more informed decisions, it’s beneficial to understand and use other technical indicators as well.
One such powerful tool is the Average Directional Index (ADX). The ADX is a unique indicator that can help you gauge the strength of a trend, which is crucial in deciding whether to enter or exit a trade.
If you’re interested in learning more about this, we invite you to read our next blog: How to Trade Effectively Using the Average Directional Index (ADX). This guide will provide you with a deep dive into the ADX, its components, and how it can be effectively used in your trading journey.