MESA Stochastics

The MESA Stochastics indicator was developed by John Ehlers and presented in the Stocks and Commodities article “Predictive And Successful Indicators”(V. 32:1 (16-25)). In the article, Ehlers explains how distorted Stochastic readings may be avoided using a roofing filter. Check out our Spotlight post where we show how the Roofing Filter may be used to correct the Fast Stochastic indicator (with video).

MESA Stochastics

Indicator Description

The MESA Stochastic indicator applies an internal roofing filter that correct distortions in the fixed scale overbought / oversold readings.  You may use this approach to improve stochastic analysis. For example, when using standard Stochastic readings you would have to manually adjust the:

  • Oversold threshold from 20 to 40 during strong uptrends
  • Overbought threshold from 80 to 60 during strong downtrends

This distortion is no longer seen in the MESA Stochastics because the roofing filter is applied internally. One may therefore use the fixed scale 20/80 levels for stochastic analysis, without manually adjusting according to the current trend scenario.

Other library indicators

Other than the MESA Stochastics, the Indicator Library also contains a number of other momentum oscillators such as the RSIDouble Smoothed Stochastics, Fast Stochastics, our improved standard Stochastics, Stochastic Momentum Index, the Projection Oscillator and the Traders Dynamic Index (TDI). As one may note, momentum oscillators are built with trend indicators to track short-term overbought / oversold scenarios. I.e. when the oscillator value approaches the upper extreme, it indicates overbought, and as it approaches the lower extreme, oversold. Finally, the TDI indicator was reviewed at length in our Indicator Spotlight.

The library also has a category for advanced oscillators featuring among others the Connors RSI, the Laguerre RSI and the MACD BB Lines. These tools build on the same concept as the standard momentum oscillators, but with a higher degree of sophistication. In general, they allow for added value approaches, utilizing a set of more complex algorithms.

You may also want to review the Channel Indicators category,  in particular the Daily Regression Channel and our improved version of the standard Regression Channel. You may also want to review our Indicator Spotlight on the Donchian Channel.

The indicator is available for NinjaTrader 8.

MESA Stochastics