The Ergodic Oscillator: A Smoothed True Strength Index with Signal Line

Summary

The document explains an Ergodic oscillator derived from William Blau’s True Strength Index. It smooths price momentum and absolute momentum through two exponential moving-average stages, forms a normalized momentum measure, then applies additional smoothing to create the oscillator and its signal line. The source gives parameter values for each smoothing stage and plots reference levels at positive and negative 20.

The oscillator is described as similar to a stochastic oscillator, but with less compression near overbought and oversold extremes, which may make trend direction clearer. Crossings with the signal line are presented as possible buy or sell triggers. However, the document provides no entry or exit rules beyond that general trigger, no asset or timeframe guidance, and no backtest or comparative evidence for the claimed behavior. Traders would need to define thresholds, test signal reliability, and account for lag from repeated smoothing before using it in a strategy.

Key ideas

• The Ergodic oscillator is derived from the True Strength Index using smoothed price and absolute momentum.
• Several exponential moving-average stages produce the oscillator and a separate signal line.
• The document describes possible buy or sell triggers based on the signal line.
• Reference levels are set at positive and negative 20.
• No backtest or evidence of signal performance is provided.

Tags

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