Using a Delayed Price Difference Indicator to Mark Turning Points

Summary

The document explains a price-difference indicator that approximates a derivative using two observed prices separated by a configurable number of bars. Because a future bar's price is unknown, it instead compares a past bar with the current one. The resulting value describes price change over an already completed interval rather than predicting the next move.

Its proposed interpretation focuses on sign changes across adjacent indicator values: a negative-to-positive change marks a possible minimum, and a positive-to-negative change marks a possible maximum. The described trading rule buys when the indicator crosses zero upward and sells when it crosses downward. No market, parameter evaluation, backtest, or performance evidence is given, and the approach may lag because it relies on historical prices and a bar delay.

Key ideas

• The indicator approximates a derivative with prices separated by a configurable bar delay.
• Using known historical prices makes the calculation descriptive rather than forward-looking.
• A change from negative to positive is interpreted as a possible minimum, while the reverse suggests a maximum.
• The suggested rule buys on an upward zero crossing and sells on a downward crossing.
• The document provides no evidence that the rule is profitable.

Tags

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