A Logarithmic Price Transformation for Comparing Close Prices

Summary

This indicator compares the unmodified closing price with a transformed price calculated from the close and a shifted historical close. The user selects how many bars back to obtain the shifted close. The transformed series applies a base-10 logarithm to the ratio between the shifted and current closes, then uses that value in a denominator to adjust the current close.

The display plots the original close and the calculated series as separate lines, allowing users to inspect how the transformation changes with the selected shift. The description gives examples with shifts of one and five bars, but reports no trading rules, empirical results, or guidance on interpreting the lines. It is therefore a price-visualization indicator rather than a documented standalone strategy; users would need to assess its behavior and usefulness for their own instruments and data.

Key ideas

• The indicator plots the closing price alongside a logarithmically transformed close.
• Its only input is the number of bars used to select the shifted closing price.
• Changing the shift changes the historical price used in the transformation.
• The document describes the calculation and display but supplies no trading signals or performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.