Saturday, April 20, 2013


All of us who use technical analysis are used to Indicators with fixed period of calculation. Also certain periods like 9 and 14 are taken for granted. These indicators do not taken into account the market conditions. Sometimes the market is volatile and not at other times. The velocity and acceleration also differs at different times. The indicators are oblivious to all these are mainly static. For example for CCI most people use 14 as the period whereas the inventor of this indicator Donald Lambert has suggest one third of cycle period.

I always have been a fan of John Ehlers. . Ehlers suggest that making the indicators adaptive to the cycle period of the concerned market would be a better solution. However he suggested using fraction of the cycle part in adaptive formulas. One of my first trials on this concept was an adaptive CCI which I called as KCCI. Of course many of you who had visited my web site (Now almost defunct) would be aware of this. I am enclosing a image of the adaptive CCI(KCCI) with the conventional CCI. You can notice that the whipsaws are lesser in the KCCI compared to the conventional one. You can experiment with it by optimizing the cycle part.

I will discuss more about other adaptive indicators in the coming posts. The afl is shared here

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