Thread: ZeroLag MACD – VertexFX Indicator

The ZeroLag MACD indicator is based upon the MACD indicator. It attempts to eliminate the lag that is inherent in MACD indicator by using two levels of filtering. It comprises of two components, the MACD component (MAGENTA histogram), and the Signal component (ORANGE line).
To calculate the MACD component, we first calculate the fast and slow EMA based on FAST_EMA and SLOW_EMA periods. We once again calculate the fast EMA of the calculated fast EMA using the FAST_EMA period, and the slow EMA of the calculated slow EMA using the SLOW_EMA period. The fast EMA lag is calculated as twice the first fast EMA minus the second fast EMA. Similarly, the slow EMA lag is calculated as twice the first slow EMA minus the second slow EMA. The MACD is the difference between the fast EMA lag and the slow EMA lag.
To calculate the Signal, we calculate the EMA of the MACD using the SIGNAL_PERIOD. We once again calculate the EMA of this signal using the SIGNAL_PERIOD. The Signal component is equal to twice the first signal minus the second signal.
Thus we use two steps to filter and eliminate lags on both the main MACD signal and on the Signal component.

BUY - Enter BUY trade when the MACD component closes above the Signal component.
SELL - Enter SELL trade when the MACD component closes below the Signal component.