Fuzzy Logic for Indicators, part 2

Fuzzy Logic for Indicators, part 2

Ok, in the beginning we have to determine our goals and instruments. We would draw our membership functions as lines in a subchart area. Our arithmetic average would be drawn as histogram and would be colored depending to absolute value of resulting function, from red to green. Also it’s good idea to draw our source indicators on chart in order to achieve the whole picture.   cAlgo Implementation   cAlgo is clean and simple but it lacks a few useful possibilities at this moment. One of them is inability to draw indicator lines...

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Fuzzy Logic for Indicators, part 1

Fuzzy Logic for Indicators, part 1

Since Charles Babbage’s invention of the first computer we know our electronic friends use simple binary logic based on “true/false” system. It’s quite enough for mathematical calculations and most financial indicators, but when we try to construct a complex indicator or a robot based on our human experience we may encounter a problem. How to tell a computer such simple human terms like “slightly more…”, “too fast…”, “practically nothing…”? However, it’s possible with fuzzy logic theory, or rather “membership functions”. Let’s define a...

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Moving Averages Envelope

Moving Averages Envelope

Moving Average Envelopes are percentage-based envelopes set above and below a moving average. The moving average, which forms the base for this indicator, can be a simple or exponential moving average. Each envelope is then set the same percentage above or below the moving average. This creates parallel bands that follow price action. With a moving average as the base, Moving Average Envelopes can be used as a trend following indicator. However, this indicator is not limited to just trend following. The envelopes can also be used to identify...

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