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Using Standard Deviation to Show Three Levels of J2JMA Trend Strength

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Summary

This indicator adds a three-level strength display to the ColorJ2JMA moving average. It uses the standard deviation of the indicator and two configurable thresholds: values between the thresholds produce a small dot, while values above the upper threshold produce a larger dot. The dot color shows the current trend direction; no dot represents the weakest level.

The document describes how to interpret the display, but gives no performance tests or trading rules for acting on its signals. It also depends on a separate smoothing library, whose implementation is not explained here. Standard deviation thresholds and a trend-colored moving average are visual aids; the text does not establish that they predict returns or specify how to choose thresholds across markets and timeframes.

Key ideas

  • The indicator combines ColorJ2JMA with a standard-deviation-based strength display.
  • A small dot marks readings between the two thresholds, and a larger dot marks readings above the upper threshold.
  • Dot color indicates trend direction, while no dot represents the weakest strength level.
  • The document provides no backtest evidence or rules for entries, exits, or threshold selection.

Tags

Technical indicatorsVolatilityTrend following

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