This lesson will cover the following
- Explanation and calculation
- How to interpret this indicator
- Trading signals, generated by the indicator
This indicator is purposed to identify market sentiment. It is calculated in three portions:
– The Kurtosis portion is calculated as follows:
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K = n-period momentum of the current bar – n-period momentum of the prior bar
– The Fast Kurtosis portion is calculated as follows:
FK = n-period moving average of K
– The Fast/Slow Kurtosis portion is calculated as follows:
FSK = n-period moving average of FK.
Trading signals are generated, when the Kurtosis indicator crosses its zero line. A signal to buy is generated, when the indicator crosses above the zero line. A signal to sell is generated, when the indicator crosses below the zero line.