Ehlers’ Price Radio: AM and FM Demodulation of Price Changes

Summary

This indicator applies a radio-inspired view to price movement: it uses the one-bar change in closing price as a signal, then plots that change alongside amplitude- and frequency-modulated measures. The amplitude measure smooths a recent envelope of the absolute change, while the frequency measure scales and clamps the change within its recent range before smoothing it. The chart therefore presents a raw movement series, symmetric amplitude bands, and a separate frequency-style line.

The accompanying description frames this method as an attempt to separate trading signals from noise, referring to John Ehlers’ published approach. The script exposes the smoothing length as an input and plots the components for visual inspection. It provides no entry or exit rules, performance results, or comparison against other filters, so it should be understood as an indicator implementation rather than a validated trading system. Its output depends on the chosen lookback and the specific transformations in this version.

Key ideas

• The indicator treats price changes as a signal that can be analyzed with radio-style modulation concepts.
• It plots the close-to-close change with smoothed amplitude and frequency measures.
• The amplitude series is based on a recent envelope of absolute changes.
• The frequency-style series clamps a scaled change to its recent high-low range before smoothing.
• The document gives no trading rules or evidence of predictive performance.

Tags

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