Building a MACD Indicator with Arnaud Legoux Moving Averages

Summary

The document describes a MACD variant that replaces its fast, slow, and signal moving averages with Arnaud Legoux Moving Averages (ALMA). It calculates weighted averages using a Gaussian-shaped weighting scheme, then subtracts the slow average from the fast average to form the MACD line and smooths that line to produce a signal line. The example lists default settings for the weighting, offsets, and lookback periods.

The author says the indicator responds faster to price changes and may identify trend turns while reducing false signals. These are qualitative claims based on chart behavior; the document gives no backtest, performance statistics, or defined evaluation method. Faster response can also change signal behavior, and the example does not establish that the indicator improves trading outcomes. It is an indicator construction example rather than a complete trading strategy, with no entry, exit, or risk-management rules.

Key ideas

• The indicator forms a MACD line by subtracting a slow ALMA of price from a fast ALMA of price.
• A separately calculated ALMA smooths the MACD line to create its signal line.
• The weighting scheme uses sigma and offset parameters alongside lookback lengths.
• The author claims quicker adaptation and fewer false signals but provides no quantitative validation.
• The document does not specify trade entries, exits, or risk controls.

Tags

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