Mov Avg Adaptive

Mov Avg Adaptive calculates and plots an average of prices specified by the Price input which changes in sensitivity based on the price volatility.

Description

This method of calculating a Moving Average provides a greater sensitivity when price direction is more stable, and reduces sensitivity when price direction is more volatile. A simple moving average provides the same sensitivity, regardless of the price volatility.

A moving average may be used to identify the trend. The market trend may be defined by the direction in which the average is moving and the relative position of prices and the moving average plot. Rising moving average values and prices above the moving average may indicate an uptrend. Declining moving average values and prices below the moving average may indicate a downtrend.

Default Inputs

Price( close ) sets the price value used in calculation of the adaptive moving average.

EffRatioLength( 10 ) sets the number of bars to calculate the efficiency ratio.

FastAvgLength( 2 ) sets the number of bars to calculate the fast smoothing factor.

SlowAvgLength( 30 ) sets the number of bars to calculate the slow smoothing factor.