RD-Forecast - VertexFX Indicator

RD-Forecast is a powerful VertexFX client side VTL oscillator that provides zero-lag identification of market cycles and turning points. Because of its low lag, it is often called as the forecast oscillator.

It is based upon the concept of weighted smoothing and regression.
In the first step, we calculate the various regression and smoothing constants based upon the regression period T3 and the smoothing constant B.
In the second step, we calculate the Linear Weighted Moving average of the closing prices over the regression period. The nearest candle has the highest weight multiplier, and the farthest candle has the lowest weight multiplier.
Now, we calculate the main BLUE indicator value by smoothing it six times using the smoothing co-efficients e1, e2, e3, e4, e5 and e6 calculated in step one.
The signal RED indicator is calculated by smoothing the main BLUE indicator, using the smoothing constant of B.

The concept behind this indicator is that, by giving a higher weightage to the current price over the previous and farther prices, we are able to identify the trend with higher accuracy (lower error factor) using linear regression. Using the smoothing co-efficient e1, e2, e3, e4, e5 and e6 , the lag is eliminated and we get a better quality of the signal.

BUY - Enter BUY when main BLUE line closes above the signal RED line. Both lines must be below zero level. Do not enter trade if candle has opened with a gap-up.

SELL - Enter SELL when main BLUE line closes below the signal RED line. Both lines must be above zero level. Do not enter trade if candle has opened with a gap-down.