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Hi Alex,
As the note in the indicator says, it is only plotting the average. William
Blau also uses the faster line (which is not plotted) for crossover
indications.
The fellow in Woodies room (which emphasizes the CCI) uses this ergodic as
an indication of trend, as you point out.
I agree that there are many ways to skin the cat to determine trend, and
this was one way that moderator chose to confirm a trend.
Regards,
Barry
----- Original Message -----
From: "Alex Matulich" <alex@xxxxxxxxxxxxxx>
To: "Barry Silberman" <Barry@xxxxxxxxxxxxxxxxx>
Cc: <omega-list@xxxxxxxxxx>
Sent: Tuesday, December 02, 2003 1:09 PM
Subject: Re: ergodic indicator - text version
> Thanks Barry, for posting the text version.
>
> After looking at the code, it seems to be one of those things that,
> like any other indicator, sometimes works and sometimes doesn't.
>
> This is nothing more than a moving average crossover, using daily
> price change rather than price as the input, smoothing it with a
> steep-rolloff (and high lag) lowpass filter (EMA of an EMA of an
> EMA), then smoothing that result (value1) with a normal EMA (to get
> value2) and indicating when value1 is higher or lower than value2.
>
> All it seems to tell you is that closes have been higher in the
> past, or lower in the past. As such, it's good for determining if
> the market has been trending up or down.
>
> What it has to do with ergodic dynamical systems or ergodic theory
> escapes me.
>
> Replacing the TXAverage with a T3 Average might improve it somewhat.
>
> -Alex
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