About MESA Spectrum
The MESA Spectrum indicator- part of the DS Essentials package — calculates the power spectrum of a price data series using the Maximum Entropy Spectrum Estimation method and produces a power spectrum plot in an indicator pane. The Maximum Entropy algorithm, unlike a simple FFT transform, will include frequencies from the entire complex frequency plane and not just the Nyquist interval which, in general terms, means that it can resolve cycle periods that are larger than the data window passed to the function. In addition, MESA has the ability to fit very sharp spectral features which are often missed by other analysis methods. The MESA Spectrum indicator will operate on all bar intervals available in Technician. Also see the MESA Cycles indicator which is the companion to MESA Spectrum.
The price data is flattened/detrended prior to processing by the MESA algorithm. The displayed power spectrum will highlight the cycles and frequencies within the data and will display the Period and Frequency below each peak. Period is calculated as the number of bars required to complete a cycle and Frequency is calculated as the number of degrees of change per bar. In addition, you can scroll backwards in the chart and the spectrum will update to reflect the values as of that point in time.
P = Bars per Cycle;
F = 360/P (360-degrees divided by period)
An alternative F value can be calculated as number of cycles in the data period N:
F = N/P.
The spectral information can be used as the basis for additional cycle study work or it can be used to fine-tune various oscillators and indicators. The typical approach is to use the MESA Spectrum to identify the dominant cycle in your data and then set your moving average or oscillator to a period that is 1/2 of the dominant cycle.
Note: At times you might see the following message in the MESA Spectrum indicator pane: “Not enough quotes to compute MESA Spectrum”. This simply means that there are currently not enough bars of data loaded into the chart to calculate the spectrum, based on the Window size you have selected. The solution is to use your mouse and drag the chart to the right, which will force more bars to be downloaded and displayed in the chart. Once enough bars are present in the chart the calculation will complete.
The full MESA Spectrum user guide can be found on the Divergence Software website here: http://www.sr-analyst.com/ChartIQHelp/index.html
It should not be assumed that past performance is any guarantee of future results. Results obtained from the use of the DS Essentials Indicator Collection for ChartIQ indicators or any information provided in this User Guide are not guaranteed to be profitable. It should be understood that investing or speculating in the financial markets involves risk and may result in either a partial or total loss of one’s investment capital. The information presented in this User Guide is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness.
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