Hi From time to time I hear about something called and ergodic indicator. I've looked on the web but can't find anything that explains it in laymans terms. Can anyone tell me what it is, its uses and advantages? Thanks, s
Also sometimes called "True Strength Index" http://www.linnsoft.com/tour/techind/custom/ergodic.htm Described in detail in "Momentum, Direction and Divergence" by William Blau http://www.amazon.com/gp/product/04...ref=sr_1_3/002-0889694-8035216?_encoding=UTF8 He also did an article on TSI for Stock and Commodities mag: http://store.traders.com/-v10-c05-trading-pdf.html ProfLogic uses it in his trading and has some very good screens on this site if you search for his posts. Good luck
bump, because I was just about to post this exact topic but I searched first. QuoteTracker has this Ergodic indicator. it also has something called Ergodic Candle Oscillator. I also see it mentioned from time to time, but a google search didn't turn up much. It seems to be like a faster, more volatile MACD... sort of... Please reply to this thread if you use/have used this indicator.
http://www.amazon.com/Momentum-Dire..._bbs_sr_1/104-6373398-1420726?ie=UTF8&s=books Momentum, Direction, and Divergence by William Blau "Our interest in technical analysis is due to our interest in making money..."
You can tool these things up as you wish. Think of market energy and how to encapsulate it for making money. One of the best applications is to eliminate the higher risk zones of trading. To just trade solid money making periods and keep yourself out of trouble when the movement isn't clear to you (translation: you lack skills to handle trading under expert conditions). You can check out the source of and root of the term to best understand that it is a well chosen term. This is a great way for average people to separate the wheat from the chaff. Here is an app that you can review. (see attachment) There is a thread called SPM and it is a tough one to use to make money for several reasons. Skip those for a while. Enter a person who has many many mistaken beliefs. Snarly. One example: he associates the duration with a MA with the type of trader, i. e., long MA with fund managers decision making. He needs to have a way to make money by not exposing himself to myths and faulty reasoning. In other words, he is weak at monitoring the markets under any circumstances and is now using all sorts of indicators as personal inventions stemming from a method that has a very high component of descretion to be able to make money (the descretion cards have not been revealed objectively so far) Other use the conventional pre PC signals from indicators designed in pre PC days where the original defualts "bridge" in the post PC era of trading. In the attachment signals are used from an indicator that does two things: makes strong trades LAST through price movement and secondly, prevents signals from occurring in times that are marginal for making money. This is the ergodic approach and benefits. Today there were holds, all profitable, going through the entire day. You do not have to look at price to do this type of trading. I ask the person, snarly, to make a log of the trades to allow him to learn something. It will not happen it turns out. That is life for some kind of people who as reisitant to input and to thinking about making money. This beginner level use of ergodic stuff, makes a lot of money and makes it steadily. Try to do the log if you want to see the power of such a filter that is embedded in an indicator. You see a level of effectiveness that is very adequate for making a living. by going further in reasoning and learning the markets much more money can be made on a daily basis. This takes a lot of understanding, however. <img src=http://elitetrader.com/vb/attachment.php?s=&postid=1328822 width=800>
Ultimately, it is just another oscillator like the MACD or stochastics. The main advantage is that the ergodic does not saturate as quickly as other common oscillators (when tuned to approximately the same level of responsiveness). For example, during a long and continuing trend the stochastics could move into the overbought or oversold regions while the trend is still strong. This might deceive you into going counter-trend too early when the trend takes a breather. The ergodic is less susceptible to this.
Here is the function in easy language: Code: inputs: r(numericsimple), s(numericsimple), u(numericsimple); value1= 100* TripleAverage(close-open, r, s, u); value2= tripleaverage(high-low,r,s,u); if value2 <> 0 then blaucsi = value1/value2 else blaucsi = 0 Then plug that into this: inputs: r(13), smooth1(5), smooth2(5); value1 =blaucsi(r,smooth1,1); value2 = blaucsi(r,smooth1,smooth2); plot1(value1, "Blaucsi"); plot2(value2, "sigline"); plot3(20,"Overbought"); Plot4(-20, "Oversold"); It takes the gaps out. It's nothing special to it until after the fact. All indicators are BS as far as I am concerned. John PS Blau used 26,5 as the default.
I shouldn't have said what I did. I know it sounds discouraging and don't wish to discourage you from using them. Everyone has to find their own style. I do use indicators for extreme readings to fade moves. RSI(14) readings over 93+ on a 15 min chart will pretty much show a top. HCR gave it today. John