A RedOrBlue Indicator from Standardized Candle Body Changes
Summary
The RedOrBlue indicator separates each bar’s open-to-close change into positive and negative components. It calculates rolling means and standard deviations for each component over a 14-period window, then standardizes the current values relative to those rolling distributions. Repeated moving averages smooth both standardized series before comparing them.
The guide describes the blue series exceeding the red series as a bullish coloring condition and the reverse as bearish; it also removes the background color when both smoothed readings are negative. The output includes both series and a zero reference line. The document gives a formula and platform-style indicator code, but no market data, backtest, or performance evidence. It offers only broad claims about trend and reversal interpretation, without defining entry, exit, or risk rules. As a result, the indicator is best understood as a descriptive signal component that would need independent validation and careful handling of zero standard deviations or other data edge cases.
Key ideas
- The indicator splits each candle’s body into positive and negative magnitude series.
- Each component is standardized against its own rolling mean and standard deviation.
- Nested moving averages smooth the standardized readings before they are compared.
- Relative strength between the two smoothed series determines the chart’s blue or red background.
- The document supplies no empirical validation or complete trading rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.