Multi-Resolution TDFI for Adaptive Trend and Regime Signals

Summary

The document explains a Trend Direction Force Index (TDFI) that combines moving-average separation with their shared directional impulse, then raises the impulse to a power to reduce the influence of small movements. Three versions use fast, medium, and slow periods; their signals are blended with the medium period receiving the largest weight. Volatility-based thresholds classify each layer as bullish, bearish, or neutral, and the combined states indicate directional consensus or a possible transition.

It describes ways to interpret the oscillator for trend confirmation, early entries, exits, divergence, and filtering choppy conditions. The evidence is a detailed indicator design and suggested use cases, not reported performance results. The author offers parameter suggestions for different trading horizons but provides no backtest, transaction-cost analysis, or independent validation. The document also treats agreement across lookbacks on one timeframe as a proxy for multiple horizons, which is not equivalent to testing across actual timeframes.

Key ideas

• Three TDFI calculations with different lookback periods form a weighted composite momentum signal.
• A power function amplifies larger impulses while suppressing smaller ones.
• Thresholds based on the composite signal's recent volatility adapt the neutral zone.
• The bullish, bearish, and neutral states across the layers create a consensus score from strong bearish to strong bullish.
• The proposed uses include trend confirmation, transition monitoring, chop filtering, and exit management.

Tags

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