Expert Advisor Programming by Andrew R. Young

Order Conditions and Indicators
You could also generate trade signals when the current price passes above or below an indicator line.
For example, the Bollinger Bands indicator can be used to generate trading signals based on the
location of the price in comparison to the upper and lower bands.
Oscillators
The other major type of indicator is an oscillator. Oscillators are drawn in a separate window, and as
their name suggests, they oscillate between high and low price extremes. Oscillators are either
centered around a neutral axis (generally 0), or they are bound by an upper or lower extreme (such
as 0 and 100). Examples of oscillators include momentum, stochastics and RSI.
Oscillators indicate overbought and oversold levels. While they can be used as an indicator of trend,
they are generally used to locate areas of pending reversal. These are used to produce counter-trend
trading signals.
Let's look at a popular oscillator, the stochastic. Stochastics consists of two lines, the stochastic line
(also called the %K line), and the signal line (the %D line). The stochastic oscillates between 0 and
100. When the stochastic is above 70, it is said to be overbought, and pending a possible reversal. If
it is below 30, it is said to be oversold.
Here is the syntax for the stochastic indicator:
double iStochastic(string Symbol, int Timeframe, int KPeriod, int Dperiod, int Slowing,
int MAMethod, int PriceField, int Mode, int Shift)
We're already familiar with the first two parameters, Symbol and Timeframe. Let's examine the
indicator-specific parameters:
• KPeriod – The period for the %K line.
• DPeriod – The period for the %D line.
• Slowing – The slowing value for the stochastic. A lower value indicates a fast stochastic,
while a higher value indicates a slower one.
• MAMethod – The %D line has a moving average method applied to it. This is the same
setting as for the moving average. We'll review the moving average methods shortly.
• PriceField – Determines the price data used for the %K line. This is either 0: Low/High or 1:
Close/Close. A value of 1 makes it more likely that the stochastic will trade at it's extremes.
• Mode – Determines the stochastic line to calculate – 1: %K line, or 2: %D line.
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