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.
Accuracy
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.
Timeliness
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.
Smoothness
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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