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  Ingenious MA
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Tradecision Fibonacci Studies Ingenious Moving Average: Optimizing Technical Analysis

Being a trader, you are probably familiar with the constant attempts to create the ideal Moving Average (MA), capable of sufficiently reducing excessive noise, have resulted in: the noise is still there.

However, not all the news is bad. Inspired by the tireless research, conducted by Kalman, Kaufman, Jurik and other talented market analysts, traders and scientists, the Tradecision research team refused to be disheartened by the situation. This perseverance was not in vain. Not that we have created something perfect. We have just managed to develop a noise-elimination filter that gives the trader a much better insight into the market situation, better than any other MA’s we know – Ingenious Moving Average. Let us spare you the marketing mumbo-jumbo and get down to the facts by looking at several examples of Ingenious MA’s performance.

The analysis will consider the filter’s performance using the 3 main measurements of any MA’s performance: accuracy, timeliness, and smoothness.

Since accuracy is responsible for how close to the original data a graph line produced by a moving average is, it is opposed to another of the 3 parameters – smoothness. The smoother the MA, the more loosely it reflects the original time series. Therefore, an accurate MA must ensure the most optimal correlation of the two parameters. In this respect, Ingenious MA eclipses any other MA in existence.

Another crucial aspect based on which any MA is evaluated, is the amount of lag it has. Using an MA significantly lagging behind the original time series can very easily result in you making late decisions an, thus losing your trades. Since a totally lag-free MA cannot exist even theoretically, Ingenious MA can be considered the MA with which the amount of lag is optimally reduced.

Undoubtedly, smoothness is considered the most important performance factor, simply because any kind of filter intended for removing noise must also make your graph optimally smooth. As we have already mentioned above, smoothness is countered by accuracy, and ensuring an optimally high level of smoothness without sacrificing the accuracy of an MA is the key obstacle. We have met that crucial challenge head on with much success.

Download the Ingenious Moving Average article (a PDF file; 140 KB).
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