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Trading Reference Links
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Indicator- any value that can
be harnessed as an aid to trading decisions.
Input Noise- any value that is used in the calculation of the indicator
that is detrimental to the purpose of the indicator.
Output Noise- any final value of the indicator that is detrimental
to the purpose of the indicator that is a result of input noise.
Acceptable lag- any amount of indicator lag that
allows for an acceptable trading range between indicator turns.
Whipsaw- any condition where acceptable lag is not present due to
output noise.
ztrader wrote:
> On Saturday, March 24, 2001, 8:15:32 AM, Gary Fritz wrote:
>
> GF> E.g. for an equivalent amount of lag (delay), JMA and T3 will have
> GF> MUCH less noise (whipsaws) than simpler tools like xaverage.
>
> You bring up an interesting point, and it sounds as though you are
> (roughly) equating noise with whipsaws. The 'real' definition of noise
> seems to be a bit elusive. :-) Could you, perhaps, elaborate on this
> seeming equivalence between noise and whipsaws?
>
> I would agree that JMA, etc have less 'noise' than others, given the
> criteria of equivalent lag, but the whipsaw issue is not as clear. For
> example, allowing a bit of offset/lag can also reduce whips. This
> could lead to the conclusion that lag is not so bad after all. Heresy,
> I know. :-) But how does one show that this conclusion, stated in the
> original post, is not valid?
>
> ztrader
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