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The adaptive indicator library automatically tunes its indicators to half of the current dominant cycle based on use of the Autocorrelation Periodogram . If we look at the math for most technical indicators, their math assumes that we are using half of the dominant cycle. We use always have them tuned to this they will offer the same physical properties with the data in terms of high and lows. If we don’t adapt the indicators and use a fixed length, then we will see a shift of the indicator in terms of high and lows and price action. We will also see the lag on the indicators shift. Let’s now look at some example of using the adaptive indicator library on a chart.

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This is an example of an adaptive ADX, Hilbert ADX and the standard ADX on Treasury Bonds. You will see that the Adaptive ADX turns much faster than the normal 14 period ADX. The reason why most indicators use a default 14 period is because they assume that there is a 28 day cycle, which had its origins in a lunar 28 day cycle. We can also see how the adaptive indicator drops below trend level when the market moves sideways after a big trend which is not the same with the fixed length one.
Click the image above to enlarge
Here is another example using corn. We can see a similar response of the adaptive ADX and the standard one. We can see that the end ends in early July and the adaptive ADX peaks about the same time just as the topping action forms. The standard ADX peaks almost three weeks later!
Click the image above to enlarge
Our final example shows RSI, both an adaptive version and the standard one on corn. We can see that the adaptive RSI, which is based on half of the dominant cycle, oscillates between overbought and oversold. The standard one does not reach overbought and oversold levels for almost nine months, while the adaptive version cycles regularly. We also see that the peaks in the adaptive version do still normally lead the standard versions.

The adaptive indicator library works on intra-day data, end of day, weekly, and monthly. It includes full open source code and lets you easily create your own version of any indicators you want from just following our simple template.

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