Oscillators and their usefulness in foreign exchange trading

Traders use different strategies in deciding whether to buy or sell foreign currencies. They can use various instruments of the technical analysis of exchange rates. Oscillators are one of them, e.g. an absolute or a relative momentum, a moving average convergence divergence (MACD), a relative strength index (RSI), a stochastic oscillator, a commodity channel index (CCI), Williams' percent range and many others. This paper deals with usefulness of some favorite oscillators in foreign exchange trading. The article presents both theoretical basis and selected trading strategies based on these oscillators. The aim of this paper is to test these strategies. Using EUR/USD historical data with daily time frame, we look for signals for opening a long or a short position. Consequently, we evaluate the proportion of successful trades. In conclusion, we discuss results of these tests.