Compound-Ratio Weighting for a Responsive Moving Average

Summary

This indicator builds a moving average by assigning exponentially increasing weights across a lookback window. It derives a base ratio from the start and end weights, then applies a multiplier to make recent observations count more heavily. The document contrasts this steady ratio between adjacent weights with the changing ratios in a conventional weighted moving average, and says the lighter tail is intended to reduce lag.

Users can choose the input price, lookback length, ratio multiplier, and smoothing. Automatic smoothing uses a value based on the square root of the lookback; manual smoothing is also available. A zero multiplier produces a simple moving average, according to the description. The author recommends the line for tracking price swings or for moving-average crossovers, but provides no comparative test results or performance evidence. Claims of low lag and close price tracking therefore remain unvalidated in the document, and the indicator alone does not define a complete trading or risk-management system.

Key ideas

• The weights rise geometrically from older observations toward the current price.
• A consistent ratio between adjacent weights distinguishes this approach from linear weighting.
• The multiplier adjusts how strongly recent prices influence the average.
• The smoothing stage can be automatic or manually set.
• The document proposes crossover and swing-tracking uses but gives no performance tests.

Tags

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