Fisher Transform Indicator from Smoothed Price Position

Summary

This indicator calculates a Fisher transform from the midpoint of each bar’s high and low. It first locates that midpoint within the rolling range of recent lows and highs, rescales the position to a bounded interval, and smooths it. The value is clipped near the interval’s limits before applying the logarithmic Fisher transform, after which the transformed series is smoothed again. The period is configurable, while the displayed code sets both smoothing factors to 0.3.

The description mentions positive and negative histogram coloring or other color choices, and the code returns the Fisher Index alongside a zero reference line. This makes the output suitable for examining changes around zero, but the document does not provide explicit entry or exit rules, market context, or performance tests. The calculation also does not specify handling for a zero rolling range, so users should check edge cases in their platform implementation and validate any trading interpretation independently.

Key ideas

• The indicator normalizes bar midpoint within a rolling high-low range before transforming it.
• The normalized price location is bounded near plus or minus one to keep the logarithmic transform finite.
• Smoothing is applied both before and after the Fisher transform.
• The output includes a zero reference line and may be displayed with positive and negative colors.
• The document gives 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.