Software update: percentile line indicator

Hello everyone, and welcome to another software update! In this update, we are introducing a new type of experimental indicator developed by our engineering team called “Percentile Line”. More after the jump!

average vs median

Most traders are familiar with moving averages, which plot a rolling average of a series of values over a given window size. For example, a 50-period simple moving average is always the average of the most recent 50 numbers in a series. Moving averages have a few great use cases but they also have some pitfalls, such as their smooth nature, adding to the lag of the data coming into them. The larger the string of numbers (the larger the window size), the slower its movement. Centennial lines also have a lag effect, but it differs in a number of ways.

Enters; averages. The median number is the middle number in a series. Unlike a moving average, there is no addition and division. We simply take the middle point in the series and this becomes the median point. TheBalance.com He has a great article on this mathematical concept that explains it much better than we can. In other words, this means that traditional moving averages tend to be skewed due to outliers due to the very nature. This does not make moving averages bad, but they must be understood.

For example, take a group of numbers: 1, 2, 3, 18, 20. The average value of these numbers is 11. However, the average value is 3.

The mean is “the sum of all numbers divided by the amount of numbers in the set”.
The median is “a value not to exceed 50% of the data points”.
If you change the last number of this data set to 200 (and thus be 1, 2, 3, 18, 200), the mean will become 56. The average, however, would still be 3.

The mean results in a number that does not tell you how to distribute the base values. The median does, and percentages do as well.

The mediator is an example of what they call “PercentagesThe median is the fiftieth percentile.

percentile line indicator

The percent line indicator is a special indicator that we developed and released at TrendSpider. We consider it experimental – which means we think it’s useful, but we haven’t identified specific use cases for it yet.

This indicator allows you to set a specific frame length and draw a percentage line on it. To plot the average price action on a rolling window, set the window to 50%.

The chart below shows a 50th percentile line 70th period (black) smoves to 70-period simple moving average (in green). As you can see, the percentage line reacts to the price more quickly in some cases, and slower in others.

In the screenshot below, we’re showing 5 middle lines that are all set to the same 50-period window:

0 percent – “minimum data set value”
Twenty-fifth percentile
fiftieth percentile – “average”
Seventy-fifth percentile
100th percentile – “maximum value of the data set”

As you can see, there are some interesting patterns here. For example, when a trend begins to reverse, the percentage lines appear to flatten. When the price is in a trend, it is very clear because of its slope and direction.

100 and 0 percent behave just like Donchian channels, if 0 is a “low” price source and 100 is a “high” price source. Notice how the same graphs look where “length” is 150 instead of 50.

Adjust the sensitivity of the percentile line

For a simple moving average, you only have one way to adjust the sensitivity of your line: the length value. For the percent line, you can work with the percentage coefficient, which naturally affects the sensitivity without affecting the degree of lag of the indicator. Check out the percent lines shown in the chart below. All of them have the same “length” value, but the “percentage” values are assigned to the Fibonacci numbers.