Some fun with CFB.
....Specifically CFB Adaptive Polarized Fractal Efficiency of Momentum.
https://www.tradestation.com/Discuss...Topic_ID=16096
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A screenshot from the page above.
https://www.tradestation.com/Discuss...20Momentum.jpg
The screenshot shows stiffer settings where some lag shows up, but this stuff can be tuned a lot better than the image shows.
::--> Note the lack of so-called 'divergence' - that is, unlike MACD and other standard TA oscillators, these have less tendency to move back down toward the center or zeroline while price is still moving up.
IMHO, a big problem with traditional oscillators is that they give false directional readings when a trend occurs, but the momentum of the trend stops increasing or falls off a bit.
Price continues to rise, but the traditional oscillators like MACD start to fall, giving a false signal.
This is less of a problem with the indicators in the screenshot. Note the trend on the right side.
"Less false 'divergence' signals,
priceless"
A lot of cool stuff can be done with tools like these.
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This is hard to articulate this late at nite but-
One nonobvious aspect of the problem where price continues to rise, but the traditional oscillators like MACD start to fall and give a false signal is that it sort of forces the use of zeroline crossings of the oscillator as a signal. But maybe, just maybe, the slope-or-state of the indicator is a better signal than a zeroline cross. By slope-or-state I mean, "If the indicator is sloping upwards or is at 100, LongCondition = true". I have seen many instances where slope-or-state of "non-divergence" indicators like PFE of Momentum outperformed zeroline crossings of diverging indicators.... An easier way to say it: In my experience, slope-or-state of "non-divergence" indicators outperforms either slope or zeroline crossings of traditional diverging indicators. Your milage may vary.
