Schaff Trend Cycle: Normalized MACD and Adaptive Trigger Levels

Summary

The document describes the Schaff Trend Cycle (STC), a trend-oriented oscillator built from the difference between short- and long-period Wilder averages. It normalizes that difference against its rolling high and low over a cycle window, scales the result, and smooths it with another Wilder average. The stated default parameters are a cycle period of 10, a short period of 10, and a long period of 21.

It also outlines automatic trigger levels derived from the oscillator history. A peak is identified when the prior STC value exceeds both the current and the value before it; the script accumulates such peak values to form an average. A second running average is calculated from prior STC readings, and both averages are returned alongside the oscillator. The text does not specify trading thresholds, entry or exit rules, or performance tests. Traders should treat it as an indicator construction note rather than evidence that the signals predict trends or improve returns.

Key ideas

• STC starts with the difference between short- and long-period Wilder averages.
• The difference is normalized within its rolling cycle range and scaled to an oscillator.
• A further Wilder average smooths the normalized series.
• The described trigger logic averages prior values at detected peaks and across prior readings.
• The document provides 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.