TRADING INDICATOR – EHLER FISHERS TRANSFORM

INTRODUCTION

• Ehler Fisher Transform assumes that prices do not have a normal Probability Density Function (PDF)
• FT is a technical indicator designed to transform any price series into a Gaussian normal distribution.
• It helps in identifying trend reversals and points of trend exhaustion.

The Fisher Transform formula is quite complex, involving multiple mathematical calculations. As a default in Trading View, 10 is the default graph normalization is done with it & a line is drawn

The indicator generates values that oscillate between -1 and 1, with extreme values indicating potential reversal points. Few apps add a multiplying factor.

Hence there are two line one EF & other EF trigger providing trigger

 for trading, through intersections with EF

CHARACTERISTICS

Range-Bound:

The transformed values tend to stay within a specific range, making it easier to identify potential reversal points.

Volatility Normalization:

It normalizes price data with high volatility for better understanding of trend changes

Usefulness:

Trend Reversal: Signals potential turning points in the market trends.

Overbought/Oversold Conditions: Identifies extreme conditions in the market.

Dependability:

Depends on Market Conditions: The Fisher Transform may perform better in certain market conditions and less effectively in others.

Signal Worthiness:

Signals Reversals: It’s more focused on identifying reversals rather than confirming existing trends. apps which modify these limits with a multiplication factor

It is important to note that the effectiveness of these indicators can vary depending upon the market conditions, time frame of the analysis & many other factors. Informed & experienced Traders prefer to use additional indicators to enhance robustness of their analysis & decisions.