Klinger Oscillator

November 21, 2023 - Around 3 mins mins to read

What Is a Klinger Oscillator?

The Klinger oscillator, developed by Stephen Klinger in 1977, is a technical indicator that provides insights into long-term money flow trends and short-term variations by analyzing the relationship between volume and price.

Klinger Oscillator Trading Strategy

The Klinger oscillator consists of two lines: the KVO line and the green line representing the EMA average. The standard signal line for determining buy and sell signals is the 13-period moving average. This indicator is based on the concept of volume moving through an asset and its impact on short-term and long-term price levels. Traders can make trading decisions by observing the crossover of these lines.

Why Is Klinger Oscillator Used?

The Klinger oscillator is used to identify buying and selling signals based on the crossover of the KVO line and the signal line (13-period moving average). When the Klinger oscillator crosses above the signal line, traders tend to become bullish, while a crossover below the signal line indicates a bearish sentiment.

What Is the Best Setting for Klinger Oscillator?

Unlike many other technical indicators, the Klinger oscillator does not have specific values assigned to its lines. Traders have the flexibility to choose the indicator’s time frame and set it according to their preferred trading period.

Klinger Oscillator Formula

The formula for calculating the Klinger oscillator is relatively complex, but traders do not necessarily need to understand it. The focus should be on understanding its application. The volume oscillator is generated by subtracting the 34-period EMA of the volume force from the 55-period EMA of the volume force.

Here’s the formula for calculating the Klinger Oscillator:

Where:

KO= Klinger Oscillator
VF= Volume Force
Volume Force =V×[2×((dm/cm)-1)]×T×100
V= Volume
T= Trend
Trend=+1 if (H+L+C)>(H-1 +L-1 +Cv-1)
Trend= -1 if Above is <=
H= High
L= Low
C= Close
dm= H-L
cm=cm-1 + dm if Trend = Trend-1
cm=dm-1 + dm if Trend =/= Trend-1

Traders who utilize the Klinger oscillator can initiate a counter position after closing their initial one, ensuring they are always in the market as the open and close signals are identical.

However, it’s important to note that the Klinger oscillator is primarily a short-term trading technique that is most effective on lower time frame charts. Its objective is to maintain a favorable win-to-loss ratio when closing all positions.

To enhance the accuracy and relevance of the Klinger Oscillator, it is commonly combined with other technical indicators such as the stochastic oscillator, price channels, trend lines, or triangles that confirm price breakouts or breakdowns. Additionally, it is advisable to use other indicators like MACD, RSI, and Aroon Indicator before making buying or selling decisions in the financial markets.

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