Damping Index: Measuring Changes in the Range of Directed Price Movement
Summary
The Damping Index is presented as an oscillator intended to indicate whether directed price movement is slowing. Its calculation compares the difference between moving averages of high and low prices with the corresponding high-low average range from one period-length earlier. The user can configure the calculation period, moving-average method, and damping threshold.
The document states that values below 1.0 signal slowing movement regardless of the direction of the preceding move. This is a description of the indicator’s interpretation, not evidence from a strategy test: no market, sample, performance figures, or validation procedure is provided. The formula also leaves implementation details such as precise indexing and parameter choices to the indicator’s settings. It should therefore be treated as a technical measure to investigate, rather than as a standalone entry or exit rule.
Key ideas
- The indicator compares the current smoothed high-low range with an earlier range separated by the configured period.
- Its purpose is to flag damping in a directed move rather than identify the move’s direction.
- Values below 1.0 are described as indicating slower price movement.
- The document gives no empirical validation or trading results for the indicator.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.