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Introduction
Acceleration/Deceleration Technical Indicator (AC) is introduced by Bill Williams in his book "Trading Chaos". The AC indicator measures acceleration and deceleration of the current driving force (Awesome Oscillator). It is represented in a separated histogram chart. When the AC value of the current bar is greater than the previous bar value, the histogram bar is colored in green (and vice versa - lower value, red bar). According to Mr. Williams this indicator will change direction before any changes in the driving force, which will change its direction before the price. When the AC value is near to the zero line, this means that the driving force is balanced. If Accelerator Oscillator is higher than zero, then it is usually easier for the acceleration to continue the upward movement and we can expect rising of the market price. Normally a green bar of the AC shows us, that we can open a long position and respectively red bar - to enter in a short position.
Calculation
First, it's calculated an Awesome Oscillator as a difference between the values of
two Moving Averages. After that, the Moving Average of the AO is subtracted from
it.
AO = Fast MA - Slow MA
AC = AO - MA(AO, n)
Where:
AO - Awesome Oscillator
MA - Moving Averages
n - Moving Average Period
Parameters
Logic - from this dropdown box we chose the logic of using of the indicator. The possible logics are:
- The Acceleratr Oscillator rises
We have a signal buy when the current bar value of AC is higher than the previous bar value. And we have a signal sell when the current bar value of AC is lower than the previous bar value. - The AC falls.
We have a signal buy when the current bar value of AC is lower than the previous bar value. And we have a signal sell when the current bar value of AC is higher than the previous bar value. - The AC is higher than the Level line.
We have a signal buy when the current bar value of AC is higher than the specified Level value. And we have a signal sell when the current bar value of AC is lower than the specified Level value. - The AC is lower than the Level line.
We have a signal buy when the current bar value of AC is lower than the specified Level value. And we have a signal sell when the current bar value of AC is higher than the specified Level value. - The AC crosses above the Level line.
We have a signal buy when the current bar value of AC is higher than the specified Level value and the previous AC value is lower than the Level value. And we have a signal sell when the current bar value of AC is lower than the specified Level value and the previous AC value is higher than the Level value. - The AC crosses below the Level line.
We have a signal buy when the current bar value of AC is lower than the specified Level value and the previous AC value is higher than the Level value. And we have a signal sell when the current bar value of AC is higher than the specified Level value and the previous AC value is lower than the Level value. - The AC changes its direction upward.
We have a signal buy when the current bar value of AC is higher than the previous bar value and the previous AC value is lower than the AC value of the bar before the previous one. And we have a signal sell when the current bar value of AC is lower than the previous bar value and the previous AC value is higher than the AC value of the bar before the previous one. - The AC changes its direction downward.
We have a signal buy when the current bar value of AC is lower than the previous bar value and the previous AC value is higher than the AC value of the bar before the previous one. And we have a signal sell when the current bar value of AC is higher than the previous bar value and the previous AC value is lower than the AC value of the bar before the previous one.
Method - During the calculating of the Accelerator Oscillator, the Forex Strategy Builder uses Moving Averages to smooth the values. From here we can chose the calculation method of the MA.
- Simple - Simple Moving Average.
- Weighted - Weighted Moving Average.
- Exponential - Exponential Moving Average.
- Smoothed - Smoothed Moving Average.
Base Price - the base price for calculating the indicator.
- Open - the first price for the bar.
- High - the highest price for the bar.
- Low - the lowest price for the bar.
- Close - the last price for the bar.
- Median - (High + Low)/2.
- Typical - (High + low + Close)/3.
- Weighted - (High + low + 2*Close)/4.
Use previous bar value - when we open a position on price different than Price Close or Day Close, we have to mark this check box. This guarantees us that at the time of opening we use the correct indicator's value.
Period Slow - the period of Slow MA for calculating the Awesome Oscillator.
Period Fast - the period of Fast MA for calculating the Awesome Oscillator.
Period AC - the period of MA that we subtract from the Awesome Oscillator.
Level - we chose a value here when it is needed from the Logic.
Default parameters
- Logic - The AC value is rising.
- Method - Simple.
- Price - Median.
- Period Slow - 34
- Period Fast - 5
- Period AC - 5
- Level - 0.0000
Usage
We can use the Accelerator Oscillator as an Open or a Close Filter. Like an Open Filter, depending of the Logic, it allows the opening of a long or short position. When we use it as a Close Filter, when the Logic's conditions are satisfied it forces the closing of the current position.