Introduction to the Ergodic Oscillator Indicator
Table of Contents
- 1 Introduction to the Ergodic Oscillator Indicator
- 2 What is the Ergodic Oscillator Indicator?
- 3 How the Ergodic Oscillator Indicator Works?
- 4 How to use the Ergodic Oscillator Indicator for MT4
- 5 Conclusion
The Ergodic Oscillator (EO) is a momentum indicator which presents momentum direction two oscillator lines, much like the widely used Stochastic Oscillator. However, its similarities end there. This is because the Ergodic Oscillator uses a double smoothed True Strength Index (TSI) as its main oscillating line and is then paired with a signal line. This double smoothed line creates an oscillator which is characteristically very smooth. It also removes the compression within an oscillator range which is evident on the Stochastic Oscillator.
What is the Ergodic Oscillator Indicator?
This indicator plots the main Ergodic Oscillator line as a blue line and is paired with its signal line which is the red line. These two lines oscillate around its midline which is zero and can move from positive to negative. It also has markers at levels -20 and +20.
How the Ergodic Oscillator Indicator Works?
The Ergodic Oscillator Indicator uses a formula which incorporates the True Strength Index to compute for its main oscillator line. It also applies two smoothing periods, which is preset at eight and five in this version.
It then calculates for the signal line which is a moving average line of the main Ergodic Oscillator line. This is also typically preset as an Exponential Moving Average (EMA) line to the main oscillator line.
How to use the Ergodic Oscillator Indicator for MT4
This indicator has four variables which can be modified within the indicator settings.
“First_R” refers to the first smoothing period of the Ergodic Oscillator, while “Second_S” refers to the second smoothing period.
“SignalPeriod” refers to the number of periods used to compute for the signal line.
“Mode_Smooth” refers to the type of moving average line used to compute for the signal line.
This indicator can be used as a momentum reversal indicator. Traders can use the crossing over of the Ergodic Oscillator line and its signal line as a basis for a momentum reversal.
Reversal signals that develop beyond the -20 and 20 range can be considered as a possible mean reversal signal. However, the two lines can go well beyond this range, especially in a trending market.
Since this indicator is an oscillator, it can also be used as a basis for trading divergences.
Buy Trade Setup
When to Enter?
Identify a possible bullish divergence. Open a buy order as soon as the blue line crosses above the red line. Set the stop loss on the support below the entry candle.
When to Exit?
Close the trade as soon as the blue line crosses below the red line.
Sell Trade Setup
When to Enter?
Identify a possible bearish divergence. Open a sell order as soon as the blue line crosses below the red line. Set the stop loss on the resistance above the entry candle.
When to Exit?
Close the trade as soon as the blue line crosses above the red line.
The Ergodic Oscillator is a decent alternative to the Stochastic Oscillator. Since the line it plots oscillate freely around zero, the lines tend to have no compression unlike the Stochastic Oscillator which is compressed within the zero to 100 range. It also makes the lines more attuned to longer term trends and momentum reversals compared to the Stochastic Oscillator. Traders who prefer to avoid this compression can use the Ergodic Oscillator as an alternative.
MT4 Indicators – Download Instructions
Ergodic Oscillator Indicator for MT4 is a Metatrader 4 (MT4) indicator and the essence of this technical indicator is to transform the accumulated history data.
Ergodic Oscillator Indicator for MT4 provides for an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust their strategy accordingly. Click here for MT4 Strategies
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How to install Ergodic Oscillator Indicator for MT4.mq4?
- Download Ergodic Oscillator Indicator for MT4.mq4
- Copy Ergodic Oscillator Indicator for MT4.mq4 to your Metatrader Directory / experts / indicators /
- Start or restart your Metatrader 4 Client
- Select Chart and Timeframe where you want to test your MT4 indicators
- Search “Custom Indicators” in your Navigator mostly left in your Metatrader 4 Client
- Right click on Ergodic Oscillator Indicator for MT4.mq4
- Attach to a chart
- Modify settings or press ok
- Indicator Ergodic Oscillator Indicator for MT4.mq4 is available on your Chart
How to remove Ergodic Oscillator Indicator for MT4.mq4 from your Metatrader Chart?
- Select the Chart where is the Indicator running in your Metatrader 4 Client
- Right click into the Chart
- “Indicators list”
- Select the Indicator and delete
Ergodic Oscillator Indicator for MT4 (Free Download)
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