DeviationScaledOscillator

Description

Deviation Scaled Oscillator is an RSI-based technical indicator that attempts to eliminate probability bias, which is common in other oscillators. Probability bias occurs when certain trends prevail in the analyzed data, thus the probability ditribution graph can be distorted. To address this issue, Fisher transform is utilized in Deviation Scaled Oscillator. In addition, several signal processing techniques are applied to eliminate noise in data.

The calculation of Deviation Scaled Oscillator is as follows:

  1. A two-bar close price difference is found and run through the SuperSmootherFilter with half the period specified for the Deviation Scaled Oscillator. 
  2. Root mean square of the value derived at Step 1 is calculated.
  3. The ratio of the first value to the second value is found.
  4. Values derived at Step 3 that fall into -2.0 to +2.0 range are run through the Fisher transform. Values out of this range are plotted unchanged.

Values of the oscillator around the +2.0 level might signify overbought conditions while those around -2.0 might signify oversold conditions. 

Input Parameters

Parameter

Description

length The period on which the Deviation Scaled Oscillator is calculated.
over bought The overbought level.
over sold The oversold level.
show breakout signals

Set this parameter to "no" to hide breakout signals. The signals are given when the main plot crosses above the oversold level or below the overbought level.

Plots

Plot

Description

DSO The Deviation Scaled Oscillator plot.
OverBought The overbought level.
ZeroLine The zero level.
OverSold The oversold level.
UpSignal A signal given when Deviation Scaled Oscillator crosses above the oversold level.
DownSignal A signal given when Deviation Scaled Oscillator crosses below the overbought level.

Example*

*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.

  Past performance is no guarantee of future performance.