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.

Indicator Description

Specifically, the MESA Stochastics indicator applies an internal roofing filter that correct distortions in the fixed scale overbought / oversold readings.  This approach is used to improve the stochastic analysis. For example, when using standard Stochastic readings on the other hand, 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). The TDI indicator specifically was reviewed at length in our Indicator Spotlight. These are built with trend indicators, tracking short-term overbought or oversold conditions. I.e. when the oscillator value approaches the upper extreme, it indicates overbought, and as it approaches the lower extreme, oversold.

Furthermore, 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.

Finally, you may 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.