Trend Quality B-Indicator:
Trend-noise Balance Indicator ( TBI )... and Hurst Exponent ( HuE)
B-Indicator is a banded oscillator that fluctuates originally between 0 and 100 (again, this variation uses dynamic bands or zones). It is calculated by dividing absolute trend by noise added to absolute trend, and scaling the result as necessary. The B-indicator doesn’t show the direction of price movement, but only the existence of the trend and its strength. It requires additional tools for reversal manifestations.
The Trend-Quality Indicator as described by David Sepiashvili in [Stocks & Commodities V. 22:4 (14-20)]. David Sepiashvili's article in this issue, "Trend-Quality Indicator," describes a method of assessing trend strength. To accomplish this, Sepiashvili uses a summing process to determine the cumulative price change (CPC). The CPC is reset to zero at every trend reversal. Trend reversals are based on the crossing of two moving averages. The CPC is "piecewise" averaged to produce the trend, which in turn is compared to a noise calculation to produce the quality indicator.
The
Hurst exponent is a measure for the behaviour of the market. It shows if the market behaves in a random, trending or mean-reversion manner. This can be used to select the right trading strategy for your market.
In the 1970’s an American engineer called JM Hurst published a theory about why financial markets move in the way they do. The theory was the result of many years of research on powerful mainframe computers, and it became known as Hurst’s Cyclic Theory. Hurst claimed a 90% success rate trading on the basis of his theory, and yet the theory has remained largely undiscovered and often misunderstood.
Studies involving the Hurst exponent were originally developed in hydrology for the practical matter of determining optimum dam sizing for the Nile river's volatile rain and drought conditions that had been observed over a long period of time.[1][2] The name "Hurst exponent", or "Hurst coefficient", derives from Harold Edwin Hurst (1880–1978), who was the lead researcher in these studies; the use of the standard notation H for the coefficient also relates to his name.
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