WPO Modified [BackQuant]

2023년 12월 20일

The Wave Period Oscillator (WPO), developed by Akram El Sherbini, is a sophisticated technical analysis tool that offers traders a dynamic way to interpret market cycles. Its design is inspired by the natural ebb and flow of markets, which often follow cyclical patterns driven by underlying economic, political, and psychological factors. The oscillator's unique contribution to market analysis lies in its ability to smooth out the "noise" inherent in daily price movements, thus providing a clearer view of the market's rhythmic fluctuations over time.

-----> Time Cycle Oscillators' in the IFTA Journal 2018 (page 66 - 77), as found below:
ifta.org/public/files/journal/d_ifta_journal_18.pdf

El Sherbini's WPO is grounded in the concept of wave period analysis, which suggests that financial markets move in waves or cycles. The oscillator translates these movements into a visual tool that oscillates above and below a central zero line. Peaks and troughs on the oscillator correspond to the crests and troughs of market price waves, providing a visual representation of the market's heartbeat.

The WPO is not merely a tool for identifying trends but also for detecting shifts in market momentum. It does this through a mathematical model that measures divergence—when the direction of the oscillator deviates from the direction of price movement. Such divergences can be precursors to potential reversals or continuations in the market, offering traders advance notice of significant changes in price direction.

Further refining its utility, the WPO incorporates methods for calculating divergence that are sensitive to the unique conditions of different markets and securities. This includes adjusting for volatility and market velocity, allowing the oscillator to provide relevant signals regardless of the market environment.

In practical terms, traders use the WPO to time their entries and exits with greater precision. When the oscillator shows a high peak or a deep trough, it can signal that a market is potentially overbought or oversold, respectively. The WPO's smoothing property ensures that these signals are not just reactionary to short-term price spikes or drops, but indicative of more substantial, sustained movements.

By providing a more measured and smoothed analysis of market cycles, the WPO helps to filter out insignificant price movements and focus on the ones that matter—those that indicate a significant wave of buying or selling pressure. This can be particularly valuable in the cryptocurrency markets, where volatility is high, and traditional indicators may struggle to provide clear signals.

For traders and analysts alike, the Wave Period Oscillator represents a convergence of technical precision and market psychology. By focusing on the periodic nature of market movements, it aligns traders with the rhythm of the markets, potentially leading to more harmonious trading decisions that are in step with the market's natural waves.

Please see the backtest here:


For more simple terms:

You can use this indicator as a the oscillator
Above 0 for long
Below 0 for short

OR
WPO MA
Above 0 for long
Below 0 for short