Introduction to the Standard OsMA Indicator
Oscillators can be used to identify reversal signals based on the crossing over of its oscillator value and its moving average. In most cases, this would be a signal line to the oscillator.
The OsMA is based on the same concept. It shows the point where an oscillator crosses its moving average.
What is the Standard OsMA Indicator?
The abbreviation “OsMA” stands for the term “oscillator of a moving average (MA)”.
The Standard OsMA Indicator is appropriately named as such. It is a basically an oscillator which shows the difference between an oscillator and its moving average line over a given window of time.
The most common oscillator used as a basis for the OsMA is the Moving Average Convergence and Divergence (MACD). This version of the OsMA indicator is also based on the MACD.
The Standard OsMA Indicator plots histogram bars to represent its oscillations. These bars oscillate around its midlevel, which is zero. Positive bars indicate a bullish trend or momentum, while negative bars indicate a bearish trend or momentum.
The color of the bars also indicates the strength of the trend. It plots positive lime bars to indicate a strengthening bullish trend, and positive red bars to indicate a weakening bullish trend. Inversely, it plots negative red bars to indicate a strengthening bearish trend, and negative lime bars to indicate a weakening bearish trend.
How the Standard OsMA Indicator Works?
The algorithm of the Standard OsMA Indicator uses a formula for the MACD as its basis for arriving at its own OsMA oscillations. It calculates for the difference between the underlying MACD and its moving average, the value of which is used to plot the oscillator bars.
The color is then based on the value of the current bar compared to the previous bar. It plots a lime bar whenever the value of the current bar is higher than that of the previous bar. Otherwise, it plots a red bar.
How to use the Standard OsMA Indicator for MT4
The Standard OsMA Indicator has a few options within its settings which can modify the characteristics of the oscillator bars.
The “fast ema period” refers to the number of periods used to calculate the faster EMA of the underlying MACD, while the “slow ema period” refers to the number of periods used to calculate for the slower EMA.
The “signal period” refers to the number of periods used to calculate for the moving average line of the underlying MACD.
“Applied price” refers to the price point on each candle which the indicator would use for its formula, whether it is the open, high, low, or close.
“Bars to process” refers to the number of historical bars which the indicator would calculate for its OsMA values.
“Wav” toggles the sound of the alarm on or off.
Buy Trade Setup
When to Enter?
Open a buy order as soon as the bars shift above zero in confluence with other technical analysis indications.
When to Exit?
Close the trade as soon as price action shows signs of a bearish reversal.
Sell Trade Setup
When to Enter?
Open a sell order as soon as the bars shift below zero in confluence with other technical analysis indications.
When to Exit?
Close the trade as soon as price action shows signs of a bullish reversal.
Conclusion
The Standard OsMA Indicator can be used as an entry trigger or an additional reversal signal. However, these signals are best used in confluence with other reversal signals, as well as other technical indications.
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