Risk Adjusted Geometric Exponent [VynthraQuant]

RAGE Index (Risk-Adjusted Geometric Exponent)

Overview

The RAGE Index is a quantitative momentum oscillator that measures the efficiency and quality of an asset's price trend. Standing for Risk-Adjusted Geometric Exponent, this indicator goes beyond simple price action by evaluating the average logarithmic growth rate relative to the asset's volatility.

In institutional finance, it is not just about how much an asset moves, but how it moves. RAGE identifies trends that exhibit high compounding growth with minimal "noise" or volatility.

The Logic Behind RAGE

The indicator is built on two core quantitative pillars:

1. Geometric Exponent (GE): Instead of simple percentage changes, we calculate the geometric mean of log-returns. This represents the true compounding "velocity" of the price.
2. Volatility Normalization: We divide the GE by the standard deviation of returns (Volatility) over a specific lookback period.

How to Interpret the RAGE Index

* The Zero Line: The most critical level. When RAGE crosses above 0, the asset has entered a state of positive geometric growth. Below 0, the asset is in a state of efficient decay.
* Trend Quality: A rising RAGE value indicates that the trend is becoming more "efficient", growth is increasing while volatility is staying low or decreasing.
* Color-Coded Candles: The script features a `force_overlay` function that colors the candles on your main chart.
* Bullish Color: Efficient growth detected (Long bias).
* Bearish Color: Efficient decay detected (Short bias).


Key Features

* Logarithmic Accuracy: Uses log-returns to ensure time-additivity and eliminate the bias found in standard percentage calculations.
* Adaptive to Volatility: Unlike a standard RSI or MACD, RAGE penalizes "choppy" price action, helping you stay out of sideways markets.
* Optimized Performance: Written in Pine Script v6 with high-efficiency math to ensure fast loading even on lower timeframes.

Settings

* GE Lookback: The window used to calculate the average growth rate.
* Volatility Lookback: The window used to measure the "risk" or noise of the price action.

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.