Investors can use all of the Bill Williams indicators to trade both stocks and futures. Price is the last thing to change in the markets. Momentum changes before price, speed changes before momentum, volume changes before speed, and traders and investors making decisions change first.
Bill Williams' Awesome Oscillator measures the momentum of the immediately preceding bars, compared to the momentum of the last several bars. This paradigm takes a simple moving average of the midpoints of the more recent bars and subtracts a simple moving average of the midpoints of the greater number of bars.
A second element of the Awesome Oscillator is the squat bars indicator which tries to indicate particularly strong market moves. This indicator can be turned on or off.
BW AO Parameters
•Zones: If checked, buy signals will become more conservative in the red zone, and sell signals will become more conservative in the green zone.
•Squat: Represents explosive situations where smaller bar ranges accompany increasing volume. In other words, the Market Facilitations Index (Range/Volume) is increasing. Values are none, tick (used for charts with bars shorter than daily), and vol (used for charts with bars of daily or longer).