Unlocking Advanced Capabilities

While indicators in their default state can be useful, Spectral Alpha empowers you to compound them together, drastically transforming their behavior and unlocking a whole new level of analytical power. This opens up exciting possibilities for refining your trading strategies.

Transforms

By combining indicators, you can achieve a variety of effects:

• Increased Stability: Reduce the impact of noise and erratic market fluctuations.
• Noise Reduction: Smooth out indicator outputs for clearer signals.
• Leading Signals: Create indicators that anticipate market movements.
• Filtering Extremes: Remove outliers and extreme values that can distort your analysis.
• Clamping Output: Restrict indicator values to specific ranges.
• Distribution Changes: Modify the statistical distribution of indicator values.
• And much more!

How it Works

The "Modifiers" tab in the indicator control screen provides an intuitive interface for transforming indicator outputs:

1. Click "Add Modifier": This initiates the process of adding a new modifier to an indicator series.
2. Select the Series: Choose the specific output series of the indicator that you want to modify. Some indicators have multiple output series (e.g., the MACD has a main line, a signal line, and a histogram).
3. Select the Indicator: Choose the indicator that you want to apply as a modifier to the selected series.

Examples

You can add multiple indicators to the same series, creating complex and powerful transformations. The possibilities are truly endless, allowing you to tailor your indicators to your specific needs and trading style.

Smoothing Output

If you have an indicator that produces noisy signals, you can apply a smoothing modifier like a moving average or a low-pass filter to its output series. This will help reduce the impact of random fluctuations and make the signals clearer.

Reducing Fluctuations

The "Cubed" transform raises all values in the series to the power of three. This minimizes values less than 1 and accentuates values greater than 1, effectively reducing fluctuations and highlighting larger movements.

Leading Indicators

Want to anticipate market movements? You can create leading indicators by combining oscillators with a High Pass Filter (HPF).

Here's how it works:

1. Apply the HPF: Add a High Pass Filter modifier to the output series of an oscillator. The HPF removes slow-moving trends and isolates the higher-frequency components of the oscillator's output.
2. Trigger on Peaks and Valleys: Look for peaks and valleys in the HPF output. These often precede turning points in the underlying oscillator and, potentially, in the price itself.

This technique can help you identify potential trend reversals or momentum shifts before they become apparent in the price action.

Automatic Value Clamping

Some indicators, like the Band Pass filter, produce values that vary significantly depending on the underlying market data. To standardize the output and ensure consistent behavior across different markets, you can use the Automatic Gain Control (AGC) to dynamically transform the series to a range of -1 to +1. This allows you to reuse the same trigger logic regardless of the market you're trading.

Explore and Experiment!

With Spectral Alpha's flexible indicator transformation capabilities, you have the freedom to explore and experiment with endless possibilities. Combine indicators in creative ways to develop unique analytical tools that give you an edge in the markets.