Cybernetic Oscillator

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Microsoft Excel: June 2025
In his article in this issue, “Making A Better Oscillator,” John Ehlers combines a couple of the bits taken from his recent articles to build an oscillator where we can tune the upper and lower frequency limits of our band of interest. This allows tuning for swing or trend response at our option. He calls the new oscillator the cybernetic oscillator.

See Figure 10 for an example of the cybernetic oscillator plotted on a daily chart of the emini S&P 500 futures contract (ES), similar to Figure 4 in Ehlers’ article in this issue. FIGURE 10: EXCEL. Two versions of the cybernetic oscillator are plotted here on a daily chart of the emini S&P 500 futures contract (ES), one using parameters for longer trends and one using parameters for shorter timeframes.
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In the article, Ehlers also provides a simple trading strategy to demonstrate using the oscillator. The trading system is built by comparing the rate of change (ROC) of two cybernetic oscillators with slightly different band specifications. In Figure 11 I show an example of recent trades based on this strategy. The lower charts in Figure 2 track the individual ROC values. When both ROC values go positive, it produces a buy signal and when either ROC value goes negative, it produces a sell signal. The green and red dots mark when these conditions are true. The green and red shading highlight the price bars involved in trades. Scrolling the CalculationsAndChart tab right to column Z (Figure 12) reveals the calculations to trade using this dual ROC strategy. As noted in the summary block, calculations in this spreadsheet cover almost five years, enough to demonstrate the simple strategy. FIGURE 11: EXCEL. Here is the example trading strategy, the dual ROC strategy. The strategy enters when both ROC values are positive and exits when either ROC goes negative. Winners and losers are highlighted on the price chart.
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FIGURE 12: EXCEL. To view the dual ROC trading strategy calculations, scroll right to column Z.
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