Developed by Emily Karobein, the Karobein oscillator is an oscillator that aim to rescale smoothed values with more reactivity in a range of (0,1)
Calculation
The scaling method is similar to the one used in a kalman filter for the kalman gain.
We first average the up/downs x, those calculations are similar to the ones used for calculating the average gain/loss in the relative strength index.
a = ema(src < src[1] ? x : 0,length) b = ema(src > src[1] ? x : 0,length)
where src is a exponential moving average of length period and x is src/src[1] in the standard calculations, but anything else can be used as long as x > 0.
Then we rescale the results.
c = x/(x + b) d = 2*(x/(x + c*a)) - 1
How To Use
It is better to use centerline-cross/breakouts/signal line.
In general when we use something smooth as input in oscillators, breakouts are better than reversals, you can see this with the stochastic and rsi.
So a simple approach could be buying when crossing over 0.8 and selling when crossing under 0.2.
Here is the balance of a strategy using those conditions, length = 50.
20 trades have been mades since the 29 oct we made 341 pips with eur/usd, of course this backtest was made during good trends period, this result is not representative of how the strategy work with other conditions/markets.
For any questions/suggestions feel free to contact me