Cauchy Difference Indicator Using Arithmetic and Geometric Moving Averages

Summary

The Cauchy difference indicator compares an arithmetic moving average with a geometric moving average, both calculated from the average of each bar’s open, high, low, and close. Its two settings control the periods used for the arithmetic and geometric averages. The document presents this difference as the indicator’s output, but does not explain a trading rule for interpreting its size or direction.

No chart examples, backtest, or performance evidence is provided. The description also omits implementation details such as how the two averages are combined into the plotted difference. Traders would need to inspect the indicator itself and test interpretations on their chosen market and timeframe before using it in a strategy.

Key ideas

• The indicator compares arithmetic and geometric moving averages.
• It calculates both averages from each bar’s open, high, low, and close prices.
• Separate period settings determine the arithmetic and geometric average calculations.
• The description provides no trading rules or performance evidence.

Tags

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