SWING•GENIE with EARLY WARNING SYSTEM
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Swing•Genie and the Early Warning System are actually two different indicators. They are displayed on the same indicator chart with each providing separate and distinct pieces of the Swing•Genie swing/day trading signals.
Swing•Genie produces the primary Buy and Sell signals and utilizes a hybrid moving filter comprised of multiple algorithms, each utilized to provide a specific attribute that dramatically improves your timing success in swing or day trading situations.
Two centers of gravity (COG) filters are first utilized because of its unique ability to accurately identify turning points. The first COG indicator is looking back 10 bars and utilizes the center point of each's barred range as the input. The second COG is a shorter period of 6 bars and it is utilizing the close of the day as its input. These two COG filters are then converted into a Pass Band Filter (PBF) by subtracting the shorter length filter from the longer length filter. Finally, the output from the PBF is utilized as the input for an ALMA filter.
ALMA is a Gaussian distribution shifted filter with an offset that is not centered on the data’s window but slightly shifted to the left of the most current data. This offset is adjustable so the trader can balance between smoothness and responsiveness. The data window size is also adjustable allowing the amount of data included within the filter to be dialed in. The third parameter is Sigma, which determines the filter’s shape and is also adjustable enabling the trader to widen or shorten the filters focus. Another unique attribute of the ALMA filters is the removal of small price fluctuations, enhancing the trend by applying a moving average twice, once from left to right and once from right to left. This process (Zero-phase digital filtering) reduces noise in the signal, further reducing phase shift (price lag) commonly associated with moving averages. ALMA invented by Arnaud Legoux and Dimitrios Kouzis Loukas.
The default inputs utilized in the ALMA settings are:
Window size (3), Offset float (0.67) and Sigma Float (1.1).
It should be noted that every component of the Swing•Genie hybrid moving filter has been optimized to produce accurate trading signals within the short time frames encountered in Swing/Day trading environments.
The output from this algorithm is simply two dots, a green Entry/Buy dot and a red Exit/Sell dot. The dots have the ability to be connected producing a visual zigzag effect that highlights the parabolic swings captured by this hybrid moving filter.
The EARLY WARNING SYSTEM is a featured article in the August 2017 issue of Technical Analysis of Stocks and Commodities. This article provides an in depth and detailed explanation of the strategies and calculations utilized in this indicator.