Center Of Gravity

 

#oscillator #meanreversion 

Inventor: John Ehlers 

An oscillator by John Ehlers that finds the balance point of recent prices, like the balancing point of a see-saw. Its special quality is almost zero lag, so it turns nearly together with price. Plotted with a signal line (its own short average). Built for sideways markets, not trends. 

Default period: 10 

Turns in the COG line happen close to turns in price. Crossings with the signal line give the timing. 

Useful readings: 

COG turns up from a low: Price swing bottoming 

COG turns down from a high: Price swing topping 

COG crosses above signal line: Short-term swing up starting 

COG crosses below signal line: Short-term swing down starting 

Works best when price is moving sideways in a range 

In a strong trend it gives many false reversal signals, avoid 

Objective rules: 

Bullish: COG crosses above its signal line. 

Bearish: COG crosses below its signal line. 

Range filter: Take signals only when market is sideways (for example ADX below 20) 

Long exit: COG crosses back below signal line 

Short exit: COG crosses back above signal line 

What makes it unique: 

It achieves near-zero lag not by prediction but by the pure mathematics of weighted balance. Its turns arrive almost together with price turns – rare among smooth oscillators. 

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is available in the System Builder on RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.