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Automated-Trading
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Automated-Trading 2011.06.28 19:20 

Mean Deviation Index Blau_MDI:

The Ergodic MDI (Mean Deviation Index, MDI) is the double-smoothed Mean Deviation Index (see Momentum, Direction, and Divergence: Applying the Latest Momentum Indicators for Technical Analysis).

The mean deviation is defined as a distance between close price and exponentially smoothed moving average, applied to close price.

  • The smoothing leads to a lag, it can be seen at price reversal points. The value of mean deviation shows the distance between price and r-period moving average, applied to price.
  • The sign of the mean deviation shows price position relative to r-period moving average, applied to price: it positive if price below the moving average and negative if price is lower than moving average.

Author: Andrey N. Bolkonsky

Mean Deviation Index by William Blau

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