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IFX_DAO indicator (Double Awesome Oscillator) is a variant of Awesome Oscillator by Bill Williams presented in his trading chaos theory. The indicator consists of two Awesome Oscillator’s lines, rapid and slow.
Formula
Median price = (HIGH + LOW) / 2
Awesome Oscillator = SMA (Median price, 5) — SMA (Median price, 34)
Trading use
Median price = (HIGH + LOW) / 2
Awesome Oscillator = SMA (Median price, 5) — SMA (Median price, 34)
Used in Meta Trader 4, this oscillator combines two Awesome Oscillator’s indicators which are displayed on the chart as a histogram.
Here are the basic rules of trading according to Double Awesome Oscillator:
- The indicator gives a buy signal when a red histogram of rapid Awesome Oscillator (AO) crosses a green histogram of slow AO from bottom to top
- Traders should sell when a red histogram of rapid AO crosses a green line of slow AO from top to bottom
- Trades should be closed when histograms intercross backwards
- You should refrain from trading when the indicator’s lines are directed sideways. You had better open a trade when you can see an obvious trend has been formed for a certain financial asset
- In case you see that indicator’s lines show mixed movement, you should trade in the direction of a slow AO’s line
