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Simple Harmonic Oscillator - indicator

From Mladen Rakic:

Theory

The indicator is based on Akram El Sherbini's article "Time Cycle Oscillators" published in IFTA journal 2018 (attached below).

The SHO is a bounded (Normalized) oscillator for the simple harmonic index that calculates the period of the market’s cycle. The oscillator is used for short and intermediate terms and moves within a range of -100 to 100 percent. The SHO has overbought and oversold levels at +40 and -40, respectively. At extreme periods, the oscillator may reach the levels of +60 and -60. The zero level demonstrates an equilibrium between the periods of bulls and bears. The SHO oscillates between +40 and -40. The crossover at those levels creates buy and sell signals. In an uptrend, the SHO fluctuates between 0 and +40 where the bulls are controlling the market. On the contrary, the SHO fluctuates between 0 and -40 during downtrends where the bears control the market. Reaching the extreme level -60 in an uptrend is a sign of weakness. Mostly, the oscillator will retrace from its centerline rather than the upper boundary +40. On the other hand, reaching +60 in a downtrend is a sign of strength and the oscillator will not be able to reach its lower boundary -40.

Usage

Centerline Crossover Tactic
- This tactic is tested during uptrends. The buy signals are generated when the WPO/SHO cross their centerlines to the upside. The sell signals are generated when the WPO/SHO cross down their centerlines. To define the uptrend in the system, stocks closing above their 50-day EMA are considered while the ADX is above 18.
Uptrend Tactic
- During uptrends, the bulls control the markets, and the oscillators will move above their centerline with an increase in the period of cycles. The lower boundaries and equilibrium line crossovers generate buy signals, while crossing the upper boundaries will generate sell signals. The “Re-entry” and “Exit at weakness” tactics are combined with the uptrend tactic. Consequently, we will have three buy signals and two sell signals.
Sideways Tactic
- During sideways, the oscillators fluctuate between their upper and lower boundaries. Crossing the lower boundary to the upside will generate a buy signal. On the other hand, crossing the upper boundary to the downside will generate a sell signal. When the bears take control, the oscillators will cross down the lower boundaries, triggering exit signals. Therefore, this tactic will consist of one buy signal and two sell signals. The sideway tactic is defined when stocks close above their 50-day EMA and the ADX is below 18.

Attaching Mladen's mt5 version and a mt4 version I did from his in where I added pre-smoothing averages

Mladen's MT5 version
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example__77.png
SHO.mq5

MT4 version with All Averages
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! SHO avgs.ex4

Akram El Sherbini's article from 2018 - Time Cycle Oscillators
Time Cycle Oscillators - Akram El Sherbini 2018.pdf

Statistics: Posted by ffsss — Thu May 23, 2024 2:39 am — Replies 1286 — Views 520549

The original rules were clear:-Compute the rolling mean of High minus Low over the last 25 days;-Compute the IBS indicator: (Close - Low) / (High - Low);-Compute a lower band as the rolling High over the last 10 days minus 2.5 x the rolling mean of High mins Low (first bullet);-Go long whenever SPY closes under the lower band (3rd bullet), and IBS is lower than 0.3;-Close the trade whenever the SPY close is higher than yesterday's high.The logic behind this trading strategy is that the market tends to bounce back once it drops too low from its recent highs.The results shown above are from an improved strategy: better exit rule with dynamic stop losses. I created a full write-up with all its details here