Aroon oscillator (ARO) was developed by Tushar Chande to determine the price trend of a stock and also to understand how strong is the trend of the stock price. The oscillator is an extended version of Aroon Indicator. In this oscillator, Aroon Down is subtracted from Aroon Up to reach the oscillator value. The oscillator value ranges from +100 to -100. Usually, a trader creates short position when oscillator touches 100 or goes near it and creates a long position when the oscillator goes near -100 or touches it. Kite charts plot this Aroon Oscillator Zerodha Kite indicator for traders.
How to set up Aroon Oscillator Zerodha Kite Indicator?
- Go to MarketWatch.
- Choose the stock you are going to trade.
- Right click on the stock and select chart from graphic icons.
- Chart window of the stock opens.
- Go to studies. Select studies.
- Go to Aroon oscillator and click on it.
- A small window opens with default parameters of the indicator.
- Once the parameters are selected the Done command is chosen, the parameters window goes off the screen and the indicator is plotted on stocks price.
- The default values can be changed as per own requirement. By default, the oscillator considers a 14-period candle for plotting the chart.
Aroon Oscillator in intraday –
- The oscillator works well in all time frames.
- The picture above shows State Bank of India (SBIN) stock price movement with respect to the indicator.
- The chart shows 1 min. timeframe.
- A short position is created when the oscillator touches 100 or goes near 100 indicating the historical top.
- The strategy shows the price trend. Understanding price trend from this indicator is important before creating a position.
- The short position is closed when the oscillator line touches -100 or goes near it indicating the historical bottom.
- A fresh buy position can also be created in such a scenario.
Partha, an engineer by education, is theoratically actively following the stock and commodity markets since 1990. He is an active trader since 2003. He has received formal education in future and options and quantum analysis. He is presently working on research oriented projects using Python and data analytics.