Simple VIDYA Smooth | QuantEdgeB

Simple VIDYA Smooth (SVS) | QuantEdgeB

🔍 What Is Simple VIDYA Smooth?
SVS is a smoothed, volatility-adaptive trend filter that blends a Gaussian-pre-filtered, low-lag moving average with dynamic standard-deviation bands. It identifies trends by measuring when price moves decisively above or below a normalized VIDYA (Variable Index Dynamic Average) baseline—filtering out noise and adapting to changing market turbulence.

⚙️ Core Components
1. DEMA Pre-Filter
o A double-EMA smoothing to reduce initial noise before further processing.
2. Gaussian Smoothing
o Applies a small-kernel Gaussian filter to produce a cleaner input series that suppresses rapid spikes.
3. VIDYA Adaptive Average
o Computes a dynamic EMA whose smoothing constant adjusts according to the ratio of short- and long-term standard deviations—making it inherently responsive in volatile times and smooth in calmer periods.
4. Volatility Bands
o Surrounds the VIDYA line with ±N×SD bands (separate multipliers for upper and lower) to capture current market volatility, yielding dynamic thresholds for trend detection.
5. Trend Signal
o Generates a “long” when price closes above the upper band, a “short” when it closes below the lower band, otherwise stays neutral.

💡 Why It’s Special
• Adaptive Responsiveness: VIDYA’s volatility-weighted smoothing constant speeds up trend recognition in choppy markets and slows in quiet ones, avoiding whipsaws.
• Multi-Stage Filtering: The DEMA→Gaussian→VIDYA sequence ensures both rapid noise suppression and flexible trend adaptation.
• Asymmetric Bands: Separate multipliers for the upper and lower volatility bands let you fine-tune sensitivity to bullish versus bearish impulses.
• Visual Clarity: Color-coded candles and filled bands highlight trending phases at a glance, while backtest tables quantify performance.

📊 Backtest Mode
AVBO includes an optional backtest table, enabling traders to assess its historical effectiveness before applying it in live trading conditions.

🔹 Backtest Metrics Displayed:
• Equity Max Drawdown → Largest historical loss from peak equity.
• Profit Factor → Ratio of total profits to total losses, measuring system efficiency.
• Sharpe Ratio → Assesses risk-adjusted return performance.
• Sortino Ratio → Focuses on downside risk-adjusted returns.
• Omega Ratio → Evaluates return consistency & performance asymmetry.
• Half Kelly → Optimal position sizing based on risk/reward analysis.
• Total Trades & Win Rate → Assess historical success rate.

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📌 Disclaimer:
Backtest results are based on past performance and do not guarantee future success. Always incorporate real-time validation and risk management in live trading.

💼 Ideal Use Cases
• Trend Identification: Pinpoint reliable trend starts and exits in stocks, FX, or crypto—minimizing lag and false breakouts.
• Volatility Regimes: Automatically adjust to quiet vs. explosive markets—no manual parameter tweaks needed.
• Multitimeframe Alignment: Use SVS on multiple timeframes to confirm trend direction before entering positions.
• System Building Block: Embed SVS as a robust, adaptive filter within larger strategies (e.g., to trigger entries or to validate signals from other indicators).

🎨 Default Configuration
• DEMA Length: 7
• Gaussian Kernel: length = 4, sigma = 2.0
• VIDYA Lengths: fast = 9, slow = 24 (or use presets Set1–Set4)
• Volatility Bands: SD length = 40

📌 In Summary
Simple VIDYA Smooth | QuantEdgeB is an adaptive trend-filtering indicator that layers multiple noise-suppressing and volatility-adjusting techniques to deliver clear, reliable trend signals. By marrying DEMA, Gaussian filtering, VIDYA’s volatility-driven smoothing, and dynamic SD bands, SVS excels at separating genuine directional moves from market noise—across any asset or timeframe.

🔹 Disclaimer: Past performance is not indicative of future results. Always backtest and align AVBO’s settings with your risk tolerance and market objectives before live trading.
🔹 Strategic Advice: Always backtest, optimize, and align parameters with your trading objectives and risk tolerance before live trading.