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The Simple Decycler is a study created by John Ehlers and presented in the
The idea behind this virtually zero-lagged trading indicator is that the market data can be considered as a continuum of cycle periods each one with a different cycle amplitude. Trending periods could be considered as segments of low-frequency segments.
With the right filter, we can identify these segments. By eliminating the price data from the high-pass filter output, we eliminate high-frequency components from the price and keep the low-frequency ones (trends).
Because the high-pass filters are almost lag-free, the simple decycler generates low-frequency components that has little to no lag.
In addition, with the simple decycler line, we also need to plot two lines that are 0.5% above and below it. These bands are called hysteresis band by John Ehlers and are used to help the trader identify the trend.
The interpretation is as follows: stocks that are trading above the upper hysteresis line are in an uptrend and, those below the lower line are in a downtrend. Stocks whose price is within the hysteresis band should be considered to be trend-neutral.
The hysteresis lines are plotted with the simple decycler code. All you have to do is add those lines to the chart's formula to plot the simple decycler technical indicator (Right click on the chart then select "Edit Formula"):
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
