The "Smooth ROC & Stochastic with Kalman Filter" indicator is a trend following tool designed to identify trends in the price movement. It combines the Rate of Change (ROC) and Stochastic indicators into a single oscillator, the combination of ROC and Stochastic indicators aims to offer complementary information: ROC measures the speed of price change, while Stochastic identifies overbought and oversold conditions, allowing for a more robust assessment of market trends and potential reversals. The indicator plots green "B" labels to indicate buy signals and blue "S" labels to represent sell signals. Additionally, it displays a white line that reflects the overall trend for buy signals and a blue line for sell signals. The aim of the indicator is to incorporate Kalman and Moving Average (MA) smoothing techniques to reduce noise and enhance the clarity of the signals.
Rationale for using Kalman Filter: The Kalman Filter is chosen as a smoothing tool in the indicator because it effectively reduces noise and fluctuations. The Kalman Filter is a mathematical algorithm used for estimating and predicting the state of a system based on noisy and incomplete measurements. It combines information from previous states and current measurements to generate an optimal estimate of the true state, while simultaneously minimizing the effects of noise and uncertainty. In the context of the indicator, the Kalman Filter is applied to smooth the input data, which is the source for the Rate of Change (ROC) calculation. By considering the previous smoothed state and the difference between the current measurement and the predicted value, the Kalman Filter dynamically adjusts its estimation to reduce the impact of outliers.
Application: The indicator's buy signals (represented by green "B" labels) indicate potential entry points for buying assets, suggesting a bullish trend. The white line visually represents the trend, helping traders identify and follow the upward momentum. Conversely, the sell signals (blue "S" labels) highlight possible exit points or opportunities for short selling, indicating a bearish trend. The blue line illustrates the bearish movement, aiding in the identification of downward momentum.
The "Smoothed ROC & Stochastic" indicator offers traders a comprehensive view of market trends by combining two powerful oscillators. By incorporating the ROC and Stochastic indicators into a single oscillator, it provides a more holistic perspective on the market's momentum. The use of a Kalman Filter for smoothing helps reduce noise and enhance the accuracy of the signals. Additionally, the indicator allows customization of the smoothing technique through various moving average types. Traders can also utilize the overbought and oversold zones for additional analysis, providing insights into potential market reversals or extreme price conditions. Please note that future performance of any trading strategy is fundamentally unknowable, and past results do not guarantee future performance.
If the indicator could give the signal exactly on the bar close, it would be one of the best confluence. But since it delays it really doesn't help to scalpers who trade low timeframes such as 5 minutes.
Thunderykp
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what time far works the best?
screator289
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Great work sir, hat's off, need more indicator like this.....thx
drdoof_crypto_moon
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anybody has pythonized code?
wyj152822
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How to set alerts？
Ark1010win
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Does this repaint or wait until bar close?
profitprotrading
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@Ark1010win, It doesn't repaint, waits until bar close
Luigi-T-Art
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@profitprotrading, Hello it does repaint as it gives the signal on one past bar please explain if there is a way to give the signal in the bar that actually close
profitprotrading
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@Luigi-T-Art, it is delayed by one bar due to the plotshape being offset by -1, that isn't repainting. You can change remove "offset" in line 95 & 96 of the code to prevent the one bar delay.