(4) Early Warning System VS-606

The early warning system is constructed by converting a short alpha-length Laguerre filter into a normalized, horizontal line. This line is then placed into a chart on the zero axis. The calculation underpinning this line is identical to that produced by a moving filter or traditional moving average. Each current bar’s succeeding data is incorporated into the indicator’s updated calculation, but the visual output is plotted on a horizontal centerline that remains static. The current close is then subtracted from the normalized Laguerre filter, allowing the trader to visualize exactly what the difference is between the most current Laguerre filter’s value and the close of the most recent candle or bar. To put this in another way, the columns indicate how far away the close of the day is from the most current value the Laguerre moving filter calculation is producing. This enables the trader to immediately visualize and gauge the beginning, middle, and end of each parabolic swing, clearly exposing diversion/reversion overreactions in both directions, creating insightful entry/exit opportunities.
 
The Early Warning Indicator produces a foundation, enabling the production of an extremely effective swing trading system, effectively generating meaningful signals when a stock is loosely tracking, or swinging above and below a short-term Laguerre filter or moving average. The greater the volatility of these swings, the more precise the indicator becomes, increasing both accuracy and profit opportunities. The added implementation of the standard deviation of root mean square to the EWS flags, signals, that have a very high likelihood or reversing. The Early Warning System was first published in the journal of Technical Analysis of Stocks and Commodities: Aug 2017 by Michael slattery.

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Versionsinformation:

Two new Alert conditions (#7 positive cross, and #8 negative cross) have been added. This was requested by several of the indicators current users. These new alerts are triggered when the indicator crosses over the center demarcation line indicating a turning point in the price.

Versionsinformation:

Changed outgoing alert text for 7 & 8. No other change to indicator script.