CyberCycle
Background
The Cyber Cycle is one of John Ehlers' cycle oscillators (from Cybernetic Analysis for Stocks and Futures). It first lightly smooths price, then applies a second-difference filter that strips out the trend and leaves behind the oscillating cycle component swinging above and below zero. Traders use it the way they use any cycle oscillator: zero-line crossings and turning points flag the rhythm of the market, and it is especially useful for timing entries and exits inside a ranging, cyclic market.
Its responsiveness is set by a single smoothing constant, Alpha, rather
than a period. A small alpha produces a smooth, slow cycle; a larger alpha makes it
quicker and noisier. Roughly, alpha plays the same role that the length does in a
conventional oscillator.
Included formula
The toolbox ships a ready-made Cyber Cycle indicator, so you can use it straight away. In AmiBroker open the Charts window, expand the WiseTraderToolbox group and drag Cyber Cycle onto a price chart.
It plots the cycle together with a one-bar-lagged copy of itself, as a fast/slow pair, and marks a buy where the cycle crosses above the lag and a sell where it crosses below. The same formula can be run as an Exploration from the Analysis window to scan a watchlist for the latest signal. Its parameters let you change the smoothing, the line colours, whether the signal arrows are shown, and let you compare against a second symbol.
The included chart calculates the cycle on the median price, (H+L)/2, with
Alpha defaulting to 0.2. These are just starting points; adjust them to
suit the market you trade.
The exported function
If you would rather build your own formula, the toolbox exports the cycle as a single AFL function you can call directly — it is the engine inside the included chart.
CyberCycle(Price, Alpha)
| Parameter | Description |
|---|---|
| Price | The price array the cycle is calculated on. You can pass an already-smoothed series if you wish. It must not contain empty/null values at the left edge of the data. |
| Alpha | A smoothing constant between 0 and 1 that controls responsiveness — it plays the same role as a period in other oscillators. Smaller values give a smoother, slower cycle; larger values react faster. Must be 0 or greater. |
Returns a per-bar array holding the cycle oscillator, centred around zero.
cycle = CyberCycle( Close, 0.07 );
Plot( cycle, "Cyber Cycle", colorBlue );
Plot( 0, "", colorGrey50, styleNoLabel ); // zero reference lineTreat upward zero-line crossings as the cycle turning up and downward crossings as it
turning down. Lower Alpha if the oscillator is too noisy, raise it if it
reacts too slowly.