Introduction to the Center Of Gravity Oscillator
The Center Of Gravity Oscillator produces nearly zero lag readings of the market corrections and turning points (pivot points) with high accuracy.
That indicator is a result of years of studies of adaptive filters by John Ehler and was developed and presented in Stocks & Commodities magazine in 2002. The custom formula of that gauge is given a few lines below.
The Center of Gravity oscillator works in a similar manner to the stochastic oscillator, but the difference is it just has no overbought and oversold areas.
It fits all kinds of timeframes and currency pairs.
The indicator is displayed in a separate window placed just below the main trading chart.
The default settings can be modified directly from the input tab. Feel free to experiment with the settings and parameters to fit your personal preferences.
Center Of Gravity Oscillator Formula
CG = -1*NUM/DEN NUM = int (n, i = 0) DEN = int (n, i = 0) , where PRICE = the price i bar (bars) back; PRICE = the current bar price; PRICE = the price 2 bars back.
How does it work? How to apply in trading?
Trading Rules Explanation
The oscillator has two signal lines: red and blue. The main signal of the indicator happens on the event of crossover:
- when the blue line crosses above the red one, you should expect a bullish correction
- when the blue line crosses below the red one, you should expect a bearish correction
In addition, signal divergence can also be observed in the Center of Gravity oscillator and it works really well. If the price continues forming lower highs and/or lower lows while the Center of Gravity oscillator remains trending higher, a divergence signal is generated and we can expect an overall trend to shift to bullish.
Similarly, if the price continues forming higher highs and/or higher lows while the Center of Gravity oscillator remains to trend lower, we can expect an overall trend to turn bearish.
Example of a good entry: the price is making new HH or LL, or COG touches a trendline and the crossover occurs.
As always, to achieve good results, remember about proper money management. To be a profitable trader you need to master discipline, emotions, and psychology. It is crucial to know when to trade, but also when not to trade. Avoid trading during unfavorable times and market conditions like low volume/volatility conditions, beyond major sessions, exotic currency pairs, wider spread, etc.
How to set up the Center Of Gravity Oscillator in MT4?
Copy and paste the center-of-gravity-oscillator.ex4 or center-of-gravity-oscillator.mq4 indicator files into the MQL4 folder of the Metatrader 4 trading platform.
You can gain access to this folder by clicking the top menu options, which goes as follows:
File > Open Data Folder > MQL4 > Indicators (paste here).
Now go to the left side of your MT4 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.
The Center Of Gravity Oscillator is well worth adding to your trading collection but remember about having realistic expectations. Just like any other technical analysis tool, is not capable of providing accurate signals 100% of the time. Thus, this forex indicator provides false signals occasionally. Its performance will vary significantly depending on market conditions. Feel free to develop your own trading system based around it.
Center Of Gravity Oscillator Free Download
To download the Center Of Gravity Oscillator for Metatrader 4 (MT4) for free just click the button below: