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I have used MESA for quite some time and have read Ehler's book on
its basis. You should also consider searching for securities that
DO NOT have a smooth fit. Look for a "reverse S" in the leading and
sine waves of MESA as it goes from a valley near -1 towards a high
of near +1. Used with other indicators, this is good predictor of a
likely change, e.g. beginning an upward move, typically as MESA
comes off the high. This may not be the same for the time frame you
are looking at (25 periods), but it is useful when looking at
shorter frames, i.e. 5-7 periods. I prefer to use MESA for its
ability to predict a likely beginning of a new trend.
A security must cycle "very nicely" on a periodic basis for MESA to
result in smooth sine wave.
Good trading,
--- In equismetastock@xxxxxxxxxxxxxxx, "zenzen" <zenzen@xxxx> wrote:
> (I sent this to another metastock group a while back but no-one
replied)
>
> Hi there,
> Has anyone ever experimented with the MESA sine wave? It appears
that under
> the right conditions it can be a pretty good indicator for trading.
>
> Now, I'd like to get an indicator that gives a reading of
how 'smooth' the
> sine wave is; and thus how tradeable the signals are.
> Here is a formula I've been working on - it kind of works but I'd
like
> something better. Drop it into an indicator and put it on your
chart with a
> default MESA sine wave using 25 periods.
>
> {MESA validity indicator - V0.1}
> theta0:=Atan(MESASineWave(25), MESALeadSine(25));
> theta1:=Ref(theta0,-1);
> theta2:=Cum(If(theta0>=0 AND theta0<=170 AND theta1<=360 AND
> theta1>=190,360,0))+theta0;
> theta3:= Mov(theta2,3,E)- Mov(theta2,5,E);
> theta4:=BBandTop(theta3, 20, S,2)- BBandBot(theta3, 20, S,2);
> theta4;
>
> 1. theta0 uses the atan function with the two parts of the MESA
sine wave to
> try to determine the phase angle.
> 2. theta1 is yesterday's value of theta0
> 3. theta2 because the angle of sin,cos etc goes from zero to 360
degrees, it
> wraps around back to zero when it hits 360. This 'undoes' the
wrapping and
> adds on 360 degrees for each time it wraps. Now we have a phase
angle that
> keeps going up from zero, and it looks like a diagonal line
> 4. theta3 is like a MACD on the diagonal increasing theta2. It
works out how
> much the phase angle increases each day, and thus how much further
through
> the cycle the MESA sine wave is. A pure sine wave increases by
exactly the
> same amount each day. a noisy sine wave increases by a different
amount each
> day.
> THUS the closer the mesa wave is to a pure sine wave the lower
this 'noise'
> is.
> 5. theta4 uses a Bollinger band width to try and normalise the
data a bit. A
> lower reading means a purer sine wave.
>
> The Mesa time periods and Bollinger band settings are Metastock
defaults.
> The moving average uses fibonacci numbers (no special reason, I
usually pick
> these as there is a nice increasing scale of numbers to pick from)
>
> As I said it's not particularly great but may help illustrate what
I'm
> talking about. There is a certain amount of delay in the system,
probably
> from the theta3 step. I think converting the MESA sine wave into a
phase
> angle could be improved too.
>
> Cheers,
> Craig.
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