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