This indicator works best on non-range bound indicators such as . As you can see in the chart below, is not useful to compare against periods that price is wildly different. Applying HS on fixes this issue (To achieve the same results, add indicator > change the source to on HS settings > since is a smoothed indicator, smoothing length is set to 1. To get similar smoothing length on the signal as in standard , set %D to 5 which is equivalent to 9 smoothing on standard ).
Gain/Loss Moving Average (GLMA) is another indicator that can benefit well from HS. GLMA is the simplest and probably the most accurate . But it is not as convenient as since it is not range bound. HS can make it range bound without compromising its accuracy. (To achieve the same results, add GLMA indicator > change the source to GLMA on HS settings > set %K length to 1).
Chart below shows HS applied to ( ADMF ) and compares it against its range bound counter part, ADP.
There are different ways of making an indicator normalized or range bound. Some indicators use RSI's approach (positive changes MA / all changes MA) such as , CMF , ADP. This approach is great but the divergence near extremes can sometimes be misleading. HS fixes this problem as long as the indicator is not making a new ATH or ATL. When it does make new ATH or ATL, this indicator gives a warning to avoid using it for detecting divergence.
It is a bit geeky to apply HS on other indicators. I will publish some of my indicators with HS and standard built-in. So stay tuned if u r interested in this indicator.
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