Digital Signal Processing – Defining & Using the Difference Equation

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12/20/2024 at 9:19 PM #241645 quote

j102491
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New

I inputted the code but in excel

y = a0 * close + a1 * close[1] + b1 * close[2] //changed

and got the follwing

Screenshot-2024-12-20-151810.png

12/20/2024 at 10:08 PM #241647 quote

JS
Participant

Senior

Hi,

I think it was about determining the variables, it is theoretically interesting but I didn’t use it anymore after this…

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12/21/2024 at 1:09 AM #241648 quote

LucasBest
Participant

Average

https://fr.tradingview.com/script/H362NdFv-PhiSmoother-Moving-Average-Ribbon-ChartPrime/ DSP FILTRATION PRIMER: DSP (Digital Signal Processing) filtration plays a critical role with financial indication analysis, involving the application of digital filters to extract actionable insights from data. Its primary trading purpose is to distinguish and isolate relevant signals separate from market noise, allowing traders to enhance focus on underlying trends and patterns. By smoothing out price data, DSP filters aid with trend detection, facilitating the formulation of more effective trading techniques.
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12/21/2024 at 1:37 AM #241649 quote

JS
Participant

Senior

Nice indicator, heavy script… Completely agree with what it says…

12/21/2024 at 9:53 AM #241651 quote

GraHal
Participant

Master

j102491 wrote:
I inputted the code but in excel y = a0 * close + a1 * close[1] + b1 * close[2] //changed and got the follwing
I don’t understand what is being said above, please could anybody enlighten me? How does excel give the results shown in the image attached to the above post??

12/21/2024 at 3:45 PM #241661 quote

druby
Participant

New

Couldn’t get prior link to work, maybe just a typo, so added again after finding it. https://eng.libretexts.org/Bookshelves/Electrical_Engineering/Signal_Processing_and_Modeling/Signals_and_Systems_(Baraniuk_et_al.) https://eng.libretexts.org/Bookshelves/Electrical_Engineering/Signal_Processing_and_Modeling/Signals_and_Systems_(Baraniuk_et_al.)/12%3A_Z-Transform_and_Discrete_Time_System_Design/12.08%3A_Difference_Equations
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12/21/2024 at 9:38 PM #241672 quote

j102491
Participant

New

Hey, thanks for you reply. I’ve enjoyed many of your post. Are you saying you don’t use difference equations at all in your trading?

12/21/2024 at 9:41 PM #241673 quote

j102491
Participant

New

Nice indicator, how can FIR be used for volatility ?

12/21/2024 at 10:46 PM #241674 quote

JS
Participant

Senior

Hi, A lot of people here are probably using a difference equation in their system… The mentioned difference equation represents the general form of a (recursive) system between the input and the output. For example, when you use an exponential moving average in a system, you are essentially already applying a specific form of the general difference equation. I also use it in this form within a system…

12/22/2024 at 12:59 PM #241690 quote

GraHal
Participant

Master

I’m confused and I end up scrolling up and down trying to see what post is getting anwered / commented on. If we are not ‘quoting’ a few words then it be good to copy and paste the name of whoever we are replying to? Just trying to bring order to chaos (not really chaos 😉 ) as this Topic could be benefical to present and future readers. Thank You Have a Good Christmas and even more so … a Prosperous New Year!
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12/22/2024 at 2:33 PM #241696 quote

JS
Participant

Senior

Hi GraHal,

That’s correct, a bit unclear. The problem with Safari (or maybe just me) is that “quoting” doesn’t work… In a nutshell: the difference equation is nothing more than a general formula that expresses the difference between the input (Close) and the output (what you see on your screen) … For example, when using a simple average as a system, the difference equation looks as follows:

Where the average (mu) is essentially the value (y[n]) that you’ll see in the chart… In a recursive system, you also use previously calculated values of y[n], such as y[n-i], which adds an extra term to the equation:

You can also, for instance, include the standard deviation, as I’ve done…

Happy holidays to you as well…

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12/22/2024 at 2:49 PM #241697 quote

JS
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Senior

My wish for 2025 is to become a better loser… 😉
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12/22/2024 at 5:03 PM #241700 quote

LucasBest
Participant

Average

I wish you to become a better winner too 😉 (would be better i guess)
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12/22/2024 at 7:47 PM #241708 quote

j102491
Participant

New

JS wrote:

Hi GraHal,

That’s correct, a bit unclear. The problem with Safari (or maybe just me) is that “quoting” doesn’t work… In a nutshell: the difference equation is nothing more than a general formula that expresses the difference between the input (Close) and the output (what you see on your screen) … For example, when using a simple average as a system, the difference equation looks as follows:

Where the average (mu) is essentially the value (y[n]) that you’ll see in the chart… In a recursive system, you also use previously calculated values of y[n], such as y[n-i], which adds an extra term to the equation:

You can also, for instance, include the standard deviation, as I’ve done…

Happy holidays to you as well…
Thank you for the explanation, happy holidays
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12/23/2024 at 5:36 PM #241735 quote

justisan
Participant

Junior

JS wrote:
My wish for 2025 is to become a better loser… 😉
…that is totally opposite of what majority is thinking is needed for their success in trading, and so – it is the absolute “correct” wish 😀
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