Mean Deviation Loop: MAD Bands and Historical Trend Scoring

Summary

The document explains a hybrid technical indicator that uses mean absolute deviation (MAD) to scale price bands and a loop-based score to compare the current volatility-adjusted price with a range of earlier observations. The score adds or subtracts points according to whether the current value is above or below each historical value. It describes three signal modes: MAD-based band crossings, threshold crossings in the loop score, and a combined mode that seeks agreement between price structure and historical momentum. A chart overlay and separate oscillator panel display the signals and score.

The author argues that MAD may react less sharply to outliers than standard deviation, and presents the combined mode as a way to filter false breakouts. The document includes configurable smoothing methods and example parameters, but provides no empirical tests, market-specific results, or comparison with simpler indicators. It is therefore an indicator description rather than evidence of trading profitability. Signals may still lag, overfit parameter choices, or behave differently across instruments and regimes; the code excerpt is also incomplete.

Key ideas

• The indicator scales price bands with mean absolute deviation rather than standard deviation.
• Its loop score counts how often a volatility-adjusted current value exceeds or falls below historical values.
• Users can choose band, loop-score, or combined signal modes.
• The combined mode seeks agreement between price bands and historical momentum.
• The document offers design rationale and sample settings but no performance validation.

Tags

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