The Klinger oscillator was developed by Stephen Klinger to determine the long-term trend of money flow while remaining sensitive enough to detect short-term fluctuations. The indicator compares the volume flowing through securities with the security’s price movements and then converts the result into an oscillator.
The Klinger oscillator shows the difference between two moving averages which are based on more than price. Traders watch for divergence on the indicator to signal potential price reversals. Like other oscillators, a signal line can be added to provide additional trade signals.
IQ Option trading platform offers the Klinger oscillator among other popular tools for options and futures traders. It helps the trader evaluate volatility and the probability of profit. It’s all about making decisions and taking action.
Indicator appearance and settings
The Klinger Oscillator is fairly complex to calculate but simple to understand. It is based on the idea of force volume. To activate the Klinger Oscillator on your trading chart, go to the “Indicators” menu, select the Momentum section and click on the name of the oscillator.
You can use the default settings or set your own values. After the activation of the Klinger Oscillator, make sure that the fast-moving average line period is 13.
Like most momentum oscillators, the Klinger appears on a chart in a separate window below the price chart. A signal line (13-period moving average) is used to trigger buy or sell signals. This technique is very similar to signals that are created with other indicators.
Look at the zero level – it is the key. The intersection of the blue and green lines is used as a signal to predict the future direction of price movement.
Some tips on trading with the Klinger Oscillator
We recommend you follow some basic rules that help to ignore false signals:
- Use the Klinger Oscillator is for trading on middle and higher timeframes (from 1 hour and longer). Do not use it for turbo options.
- Do not use the Klinger Oscillator for sideway market.
- When an asset is in an overall uptrend—such as when it is above its 100-period moving average and the Klinger is above zero or moving above zero—traders could buy when the Klinger oscillator moves above the signal line from below.
- When an asset is in an overall downtrend, traders could sell or short-sell when the Klinger oscillator moves below the signal line from above. Klinger noted this was especially noteworthy when the indicator had seen an uncharacteristic spike above zero.
How to trade with the Klinger Oscillator?
The Klinger oscillator uses price and volume to create two EMAs. The indicator then shows the difference between these two EMAs. A signal line is then added to provide additional trade signals.
We recommend that traders follow the basic algorithm:
- CALL option should be bought when the signal line (blue, 13th period) crosses the green one moving up. Both lines should be below the zero level, and the market should be up.
- PUT option is acquired when the lines are over zero and the trend is down.
It is recommended to trade on higher timeframes, the expiration period more than two bars.
The Klinger Oscillator is one of the right financial tools that can help you reach your financial goals. You can find it among the standard set of trading tools provided by IQ Option trading platform.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
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