MrBadger

Mean recursion envelope

Free for public consumption


There is very little original here, the idea is discussed in the underground traders alliance, ( google em), and was apparently the basis of what was at one time myfxbooks most profitable strategy.

I can't find the original video that was floating around on youtube, but if i find it again, i'll link it here.

This is bascially just the TV default envelope code copied and modified.

The idea is to have an envelope based on a low length, exponential basis. Then to manually "tune" the percent input so that the envelopes engulf most bars. Whenever price goes outside the envelopes (especially at key levels), look for a change to enter a reversion back to the ema .

This manual tuning when switching between time-frames and symbols of the percentage input, becomes arduous.

Instead this script uses the TV envelope code, but gets a setting based on the average of true range and "autotunes" with this.

Anything that protrudes beyond that level, especially at key levels, is likely to revert back to the ema . Bear in mind, a run away trend will also push past the envelopes and continue running for several (3-5) bars so, use it mindfully and thoughtfully with all the usual cautions about risk management.
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