Geometric Exponent [VynthraQuant]

Overview

The Geometric Exponent is a specialized momentum and trend-strength indicator designed to quantify the average logarithmic growth rate of an asset over a specific lookback period. Unlike standard moving averages, this indicator focuses on the geometric mean of returns, providing a more accurate representation of compounded growth or decay.

By smoothing out the noise of daily price fluctuations through log-returns, the Geometric Exponent helps traders identify the underlying "velocity" of a trend.

How it Works

The indicator calculates the log-return for each bar within the user-defined GE Lookback period. It then computes the arithmetic mean of these log-returns, which mathematically represents the exponent of the geometric growth over that window.

Positive Values: Indicate a period of geometric growth (upward trend).

Negative Values: Indicate a period of geometric decay (downward trend).

Zero Line: Acts as the equilibrium point where there is no net growth.


Key Features

Log-Return Basis: Better suited for financial time series analysis than simple percentage changes, as log-returns are time-additive.

Customizable Lookback: Adjust the GE Lookback to fit your trading style, from fast-reacting scalping to long-term trend following.

Clean Visuals: An oscillator-style plot that makes it easy to spot momentum shifts and divergences.


How to Use

Trend Confirmation: Look for the Geometric Exponent to stay consistently above zero for long-term bullish trends and below zero for bearish trends.

Mean Reversion: Extreme peaks or valleys in the exponent may suggest that the current growth rate is unsustainable, potentially signaling an upcoming retracement.

Divergence: If price makes a new high but the Geometric Exponent makes a lower high, it suggests the "compounding power" of the trend is weakening.

General Disclaimer
This indicator is for informational and educational purposes only. It does not constitute financial advice. The creator bears no responsibility for any financial decisions or losses resulting from its use. Past performance is not indicative of future results.

Islamic Disclaimer
All trading activity should be approached with awareness of halal and haram principles. Ensure your investments, instruments, and methods align with Islamic ethical standards. This tool does not promote speculative or impermissible practices.