Trading Channel Index: A Normalized Price Deviation Oscillator
Summary
The Trading Channel Index (TCI) is described as an oscillator comparing the applied price’s deviation from an exponential moving average with a smoothed measure of that deviation. The calculation first takes the absolute distance between price and its average, smooths that distance, and uses it to scale the signed price difference. This normalization is intended to express price movement relative to its recent variation.
The indicator has configurable periods for the price average and smoothing, a scale coefficient, and a choice of applied price. The document provides the calculation components but no trading rules, example chart, performance evidence, or guidance for interpreting threshold values. It therefore explains how TCI is constructed, but does not establish whether it predicts returns or how it should be combined with other signals. Results may depend on parameter choices and the selected price input.
Key ideas
- TCI scales the signed gap between price and its exponential moving average by smoothed absolute deviation.
- The calculation uses exponential moving averages for both the price baseline and deviation measure.
- Users can configure calculation periods, a coefficient, and the applied price.
- The document gives no entry rules or evidence of trading performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.