Building a Three-Oscillator PPC Signal with Moving Average Filtering

Summary

The document defines a pseudo Pearson correlation (PPC) that measures two oscillator series relative to a third reference series. Its example uses DeMarker and Money Flow Index relative to RSI, calculating rolling sums of deviations over a configurable correlation period. Positive and negative readings describe whether the first two oscillators move together or apart relative to RSI; the indicator does not provide trade direction by itself.

The proposed trading framework pairs PPC readings with a moving average trend filter. It describes positive-correlation and negative-correlation entry concepts, with the latter framed as a contrarian reversal setup. The article includes MetaTrader implementation details and says both strategies were executed by an Expert Advisor, but provides no detailed performance statistics in the supplied text. It presents the approach as requiring further optimization and backtesting. Since the formula substitutes a third variable for the means used by Pearson correlation, its bounded output should be treated as a custom relationship measure rather than conventional statistical correlation.

Key ideas

• PPC measures deviations of two oscillator series from a third reference series over a rolling window.
• The example uses DeMarker and Money Flow Index relative to RSI.
• PPC readings indicate relative co-movement or divergence, but do not indicate market direction alone.
• A moving average filter supplies trend context for PPC-based entries.
• The article reports strategy execution but gives no detailed evidence of profitability.

Tags

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