Corrected Average: A Volatility-Threshold Moving Average Filter

Summary

The Corrected Average, also called the Optimal Moving Average, is described as a moving-average filter that adjusts its response to volatility. Its central rule is that the time series must move beyond a volatility-dependent threshold before the indicator changes direction or level. The stated aim is to avoid reacting to weak trend movements and reduce false signals when the trend lacks strength.

The document also notes a revised version with a shift parameter, proposed for use in identifying support and resistance, and says an exponential-averaging bug was fixed. It provides no formula, parameter guidance, chart, market example, or performance evidence, so the underlying calculation and practical behavior cannot be assessed from this description alone. Traders would need to inspect the actual indicator implementation and test it across instruments and market conditions before relying on its signals.

Key ideas

• The Corrected Average is presented as a volatility-adjusted moving-average filter.
• The indicator changes when price or the series exceeds a volatility-dependent threshold.
• The threshold is intended to suppress signals during weak trends.
• A shift parameter is proposed for support and resistance analysis.
• The description supplies no calculation details or empirical performance evidence.

Tags

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