Accumulative Swing Index on IQ OptionToday we are going to talk about the Accumulative Swing Index. Technical indicators help, among others, in making predictions about the future direction of the price. The Accumulative Swing Index is one such indicator. It indicates the overall value of the SI in a given time period.

The basics of the Accumulative Swing Index

The Accumulative Swing Index was invented by J. Welles Wilder Jr. He was an American mechanical engineer and then a real estate developer and market trader. The ASI was not the only indicator developed by him. The Relative Strength Index (RSI), the Average True Range (ATR), the Parabolic Stop and Reverse (SAR) or Wilder's Moving Average also belong to his work.

Where to find ASI on IQ Option
Where to find the ASI on IQ Option

How is ASI calculated?

In Accumulative Swing Index calculations, differences between opening and closing prices are taken into account. And so the previous closing price is compared with the previous opening price, the current closing price with the previous closing price and with the opening price, the highest and the lowest intraday prices are compared with the previous closing price.

Who can use the ASI

Traders may use the Accumulative Swing Index in order to analyse long-term currency and stock price movements although it is especially beneficial in swing trading.

Swing trading is based on small changes in the price during the day. The price is in constant motion and it does not move in one direction without any pullbacks. So swing traders use that to open and close various positions for a short period of time.

The ASI helps in confirming price divergences as well as identifying the breakouts from the general trend.

How do you interpret Accumulative Swing Index?

Once you add the indicator to the chart it will appear in the separate window below. It is in a form of a line that moves around the 0 line.

ASI follows the price creating similar swing highs and lows
ASI follows the price creating similar swing highs and lows

The Accumulative Swing Index rises above 0 when the price increases which means there is an uptrend in the market. The ASI falls below 0 and moves there when the price drops, that is the market is in a downtrend. The ranging market will give the readings of the ASI close to 0. It is possible to draw trend lines on the ASI graph as we do on the price chart.

When ASI is positive, we have an uptrend
When the ASI is positive, we have an uptrend

The indicator follows the candlestick patterns on the price chart and so it can be used as a confirmation for them. Be ready to open a position for the price increase when the ASI moves up. Close an up position and sell when the indicator is in a negative area.

When ASI is negative, we have a downtrend
When the ASI is negative, we have a downtrend

Final words

Indicators are extremely useful in technical analysis. The Accumulative Swing Index will assist you in defining the trend and the trend breakouts. It is, however, a good idea to use an extra confirmation for the opening and closing of your positions from different tools.

The price fluctuates constantly and sometimes changes the directions very fast. Setting a stop loss may protect your capital against severe loss.

Use the IQ Option demo account. It provides a risk-free environment as it is supplied with virtual cash. You may practice trading with the Accumulative Swing Index there as long as you need to. After some time you will be ready to invest your real money in the live IQ Option account. If you are already using Accumulative Swing Index, share your methods in a comment under the article.

Wish you good luck!

General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose

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