A Modified EMA Calculation Designed to Reduce Lag

Summary

This document describes a modified exponential moving average that follows a proposal by Bob Fulks and Alex Matulich, originally used as part of an improvement to the T3 calculation. The alteration changes how the EMA is calculated, with the stated aim of reducing lag relative to a regular EMA using the same parameters. The document calls this variant a fast EMA.

It suggests applying the indicator in the usual way and treating a change in line color as a possible signal. A comparison is described between the modified and regular EMA lines, but no numerical results, test method, or evidence of improved trading performance is provided. The lag reduction is the design motivation, not a demonstrated guarantee; the note also leaves the precise calculation and color-change rules unspecified.

Key ideas

• The indicator modifies the EMA calculation following a proposal associated with T3 improvements.
• The modification is intended to reduce lag compared with a regular EMA.
• The suggested use is to treat a color change as a potential signal.
• The comparison uses regular and modified EMA lines with the same parameters, but reports no performance testing.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.