HURST STABILITY INDEX Trading Guide

The Hurst Stability Index (HSI) is a powerful oscillator designed to measure the underlying fractal nature of the market, distinguishing between trending environments (order) and mean-reverting or ranging environments (chaos). By scaling the Hurst Exponent into a readable 0 to 100 index, it helps traders determine whether to deploy trend-following or range-bound strategies.

What does the indicator show?

• HSI Line: The main oscillator line fluctuating between 0 and 100.
• Bullish Order Zone (>60): The indicator line turns green, signaling that the market has established a stable bullish trend.
• Bearish Order Zone (<40): The indicator line turns red, indicating a stable and persistent bearish trend.
• Chaotic Noise Zone (40-60): The shaded background area. When the HSI line is within this zone, the market is exhibiting random walk behavior (choppy, mean-reverting, or directionless).

Key Settings

• Hurst Length: The lookback period over which the log-returns and cumulative deviations are calculated. Larger values yield a smoother, more macro perspective of market stability.
• Smoothing: Applies an averaging filter to the final index to prevent sudden, erratic fluctuations in the oscillator line.
• Sensitivity: Acts as a multiplier to scale the raw Hurst metrics, expanding or condensing how aggressively the indicator escapes the 40-60 random walk zone.

How to use Strategy Parameters (Condition Source)

Within the Strategy Tester module, you can leverage the data from this indicator to create powerful logical conditions for trade entries and exits.

1. Stability Metrics

Use these metrics to define the market regime before taking a trade.

• value — The computed Hurst Stability Index ranging from 0 to 100.
• hurst — The raw, underlying Hurst exponent value (where 0.5 is random noise, >0.5 implies trending, and <0.5 implies mean-reverting).

Strategy Example: If your strategy relies on strong momentum breakouts, you can add a filter condition requiring value > 60 before entering a Long position, ensuring you only trade when the market has proven bullish order, avoiding the chaotic noise zone.