Ehlers Decycler Oscillator: Low-Lag Reversal Signals with Line Crossovers

Summary

This document describes John Ehlers’ decycler oscillator and a paired-line trading interpretation. The construction uses a high-pass filter to remove faster components from price, then derives an oscillator intended to retain slower movement with little lag. A faster and a slower version use different filter periods and scaling parameters; the document gives example settings of 100 and 125 for their periods. It proposes entering long when the fast line crosses above the slow line and exiting when it crosses below.

The text explains the signal-processing intuition and includes an implementation in a trading-platform language, but it supplies no backtest, transaction-cost analysis, market examples, or evidence that the claimed low lag produces profitable trades. The crossovers can still whipsaw, and the approach’s results may depend on instrument, timeframe, parameter choices, and execution. The stated rules cover long entries and exits only; they do not define short trades or position sizing.

Key ideas

• The decycler uses filtering to suppress higher-frequency price components while retaining slower movement.
• A fast and a slow oscillator line are calculated with different filter parameters.
• The proposed long entry occurs when the fast line crosses above the slow line.
• The proposed long exit occurs when the fast line crosses below the slow line.
• The document gives no performance evidence or guidance on costs, position sizing, or short trades.

Tags

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