chaikin oscillator (ch o)

Related: long-term trend trix oscillator for metatrader 5 - another powerful indicator for MetaTrader 5 traders.

chaikin's oscillator (cho) is the difference between moving averages of accumulation/distribution.

Also recommended: stochastic oscillator indicator for metatrader 5 - similar indicator with strong performance on MetaTrader 5.

the concept of this oscillator is based on three key principles:

1. if a security or index closes higher than its average intraday value, it indicates accumulation. the closer the closing price is to the maximum, the stronger the accumulation. conversely, if the closing price is lower than the average, it suggests distribution, with the intensity increasing as it approaches the minimum.

2. steady price increases are typically accompanied by rising trade volume and significant accumulation. volume acts as the fuel for market growth, and its divergence from price movement suggests a lack of momentum for continued upward movement. conversely, price declines often occur with low volume and end with institutional investors liquidating positions.

3. the chaikin oscillator tracks the flow of money into and out of the market by comparing volume and price dynamics. this comparison helps identify short- and medium-term market peaks and troughs.

as with any technical analysis method, it is advisable to use the chaikin oscillator in conjunction with other indicators. combining it with tools like envelopes based on a 21-day moving average and an overbought/oversold oscillator can enhance the reliability of short- and medium-term trade signals.

the most significant signal occurs when prices reach an extreme (especially on the overbought/oversold level), but the chaikin oscillator fails to surpass its previous extreme and reverses direction.

signals aligned with the medium-term trend are generally more trustworthy than those moving against it.

however, the oscillator's confirmation of a new maximum or minimum does not guarantee price movement in that direction.

another approach to using the chaikin oscillator involves considering a change in direction as a buy or sell signal, but only if it aligns with the price trend. for instance, if a security is in an uptrend and its price is above the 90-day moving average, an upward turn of the oscillator in the negative value area can be interpreted as a buy signal, provided the price remains above the moving average.

calculation:

the chaikin oscillator is calculated by subtracting a 10-period exponential moving average of the accumulation/distribution indicator from a 3-period exponential moving average of the same indicator.

cho = ema (a/d, 3) - ema (a/d, 10)

where:

- ema: exponential moving average
- a/d: value of the accumulation/distribution indicator

You may also like: channel and stochastic oscillator - excellent alternative for indicator users on MetaTrader 5.

#property copyright "robotfx"
#property link "https://robotfx.org"
#property description "this code is educational. feel free to use, modify and upgrade as you wish. visit robotfx.org for professional trading tools"
#include <movingaverages.mqh>
#property indicator_separate_window
#property indicator_buffers 4
#property indicator_plots   1
#property indicator_type1   draw_line
#property indicator_color1  lightseagreen
input int                 inpfastma=3;                // fast ma period

.......

• This tool is provided for educational and testing purposes only.
• Past performance does not guarantee future results.
• Trading involves substantial risk of loss. Use on a demo account first.
• Results may vary depending on market conditions, broker, and settings.
• We recommend thorough backtesting and forward testing before using with real funds.