Dss Oscillator Metatrader 4 Forex Indicator Review

In the world of forex trading, technical indicators play a vital role in analyzing market trends and making informed decisions. One such indicator is the DSS Oscillator Metatrader 4 Forex Indicator, which has gained popularity among traders due to its ability to provide reliable signals for entry and exit points.

The DSS Oscillator Metatrader 4 Forex Indicator is based on the Double Smoothed Stochastic (DSS) algorithm, which was developed by William Blau. The oscillator consists of two lines – a faster one that reacts quickly to price changes and a slower one that provides a smoother trend view.

By combining these two lines, traders can identify potential buy or sell signals when they cross over each other or diverge from each other, respectively. Moreover, this indicator also incorporates overbought and oversold levels to help traders avoid false signals and make better-informed trades.

Dss Oscillator Metatrader 4 Forex Indicator

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In this article, we will explore the features of the DSS Oscillator Metatrader 4 Forex Indicator in more detail and explain how it can be utilized effectively in forex trading strategies.

Understanding The Double Smoothed Stochastic Algorithm

The Double Smoothed Stochastic (DSS) oscillator is a popular technical indicator utilized in the forex market. It is an improved version of the traditional stochastic oscillator, which measures the momentum strength of a currency pair by comparing its closing price to its trading range over a specified period.

The DSS algorithm uses two moving averages to smooth out fluctuations and filter out noise from the original stochastic reading. Interpreting indicator readings generated by the DSS oscillator can be done in several ways.

One common approach is to look for divergence between the oscillator line and the price chart, which may signal a potential reversal or continuation pattern. Another way is to use overbought/oversold levels as trade entry/exit signals, with values above 80 indicating possible selling opportunities and values below 20 suggesting buying opportunities.

Applying DSS oscillator to different trading styles can yield varying results depending on the trader’s risk tolerance, time horizon, and overall strategy. For example, short-term traders who prefer high-frequency trades may find it useful to combine DSS with other indicators such as Moving Averages Convergence/Divergence (MACD) or Relative Strength Index (RSI).

On the other hand, long-term investors who focus on fundamental analysis may use DSS as a confirmation tool for their buy-and-hold positions. Ultimately, successful usage of any indicator requires thorough backtesting and constant monitoring of market conditions to adjust one’s approach accordingly.

The Functionality Of The Dss Oscillator Metatrader 4 Forex Indicator

The DSS Oscillator is a popular technical analysis tool used in the forex market to identify overbought and oversold conditions of an asset. It is based on the concept of double smoothing and uses two moving averages, one fast and one slow, to generate trading signals.

The oscillator moves between 0 and 100, with readings above 80 indicating overbought conditions and those below 20 signaling oversold conditions.

Calculation method:

  • The first step in calculating the DSS Oscillator involves determining the difference between the price and its exponential moving average (EMA). This value is then smoothed using another EMA.
  • Next, the absolute value of this smoothed difference is calculated along with its exponential moving average.
  • Finally, these two values are combined to create the DSS Oscillator reading.

When compared with other forex indicators, such as RSI or MACD, the DSS Oscillator offers several advantages. Firstly, it generates fewer false signals due to its unique calculation method that incorporates double smoothing. Secondly, it can be customized according to individual preferences by adjusting its sensitivity levels. Lastly, it works well for both short-term and long-term trading strategies.

Overall, traders use the DSS Oscillator Metatrader 4 Forex Indicator as part of their decision-making process when entering or exiting trades. Its ability to accurately identify potential trend reversals makes it a valuable addition to any trader’s toolkit.

By understanding its calculation method and comparing it with other indicators available in the market, traders can gain insights into how best to utilize this powerful tool within their own trading strategy.

Identifying Buy And Sell Signals With The Dss Oscillator

Having understood the functionality of the DSS Oscillator Metatrader 4 Forex Indicator, let us now move on to identifying buy and sell signals with this tool.

The oscillator is designed to provide a reading between zero and one hundred that depicts an asset’s momentum in the market. When it crosses above seventy-five, it indicates overbought conditions while crossing below twenty-five signifies oversold territories.

One way traders can identify potential buy signals with the DSS oscillator is when it crosses above its signal line from below twenty-five levels, indicating bullish momentum. Conversely, they can look for short positions when the oscillator falls back under its signal line after reaching overbought regions.

However, these strategies are not always reliable as some assets may have different price characteristics requiring adjustments in oscillator parameters. Therefore, traders need to perform backtesting performance on various currency pairs or other financial instruments before deploying any trading strategy using this indicator.

This process helps them evaluate past data and adjust their settings accordingly based on how well it performs historically. By doing so, traders can better understand the strengths and weaknesses of this tool when applied to different markets and make informed decisions about whether or not to use it in their trading activities.

Utilizing Overbought And Oversold Levels For Improved Trading Strategy

Traders often experience a range of emotions while executing trades. Fear, greed, and anxiety are some common feelings that can impact one’s trading decisions. It is important to manage emotions while using the DSS oscillator metatrader 4 forex indicator as it can help traders make objective decisions based on market data rather than their emotional state.

One way to optimize the use of the DSS oscillator is through backtesting. By testing various configurations of the indicator across different currency pairs, traders can identify which settings work best for specific markets. This process helps eliminate guesswork and provides statistical evidence supporting an effective strategy.

It is also crucial to consider overbought and oversold levels when utilizing the DSS oscillator in order to improve trading outcomes. Overbought conditions indicate a potential sell signal whereas oversold conditions suggest a buy opportunity. By paying attention to these signals and implementing them into your strategy, you may be able to achieve greater success in your trades without relying solely on subjective decision-making processes.


The Double Smoothed Stochastic (DSS) oscillator is a popular technical analysis tool used by traders to identify oversold and overbought market conditions. This algorithm uses two moving averages of the stochastic indicator, resulting in a smoother reading that filters out some of the noise associated with traditional stochastics.

The DSS oscillator Metatrader 4 forex indicator utilizes this algorithm to provide traders with valuable insights into price momentum and potential trend reversals. By applying the DSS oscillator to their trading strategy, traders can identify buy and sell signals based on changes in momentum.

When the indicator crosses above its signal line, it generates a bullish signal indicating a potential buying opportunity. Conversely, when the DSS oscillator falls below its signal line, it generates a bearish signal indicating a possible selling opportunity. In addition to identifying entry and exit points, traders can also use the DSS oscillator to determine overbought and oversold levels.

When the indicator reaches extreme levels such as above 80 or below 20, it suggests that the market may be due for a reversal. Utilizing these levels alongside other technical indicators can help improve trading strategies and increase profitability. Overall, incorporating the DSS oscillator Metatrader 4 forex indicator into one’s technical analysis toolkit can offer valuable insights into market trends and aid in making informed trading decisions.

By understanding how this algorithm works and utilizing its features effectively, traders can potentially enhance their success in navigating today’s dynamic foreign exchange markets.

Author: Dominic Walsh

I am a highly regarded trader, author & coach with over 16 years of experience trading financial markets. Today I am recognized by many as a forex strategy developer. After starting blogging in 2014, I became one of the world's most widely followed forex trading coaches, with a monthly readership of more than 40,000 traders! Make sure to follow me on social media: Instagram | Facebook | Linkedin | Youtube| Twitter | Pinterest | Medium | Quora | Reddit

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