Corrected DEMA with Adaptive Flattening and Floating Levels

Summary

This indicator builds on the double exponential moving average, which is intended to reduce the lag of a traditional moving average. It applies a correction that compares changes in the DEMA with recent price variability: when the deviation is judged insignificant, the corrected curve is held flatter; otherwise, it moves toward the DEMA. The display includes the original and corrected averages, along with upper, middle, and lower floating reference levels calculated from the corrected curve’s recent range.

The indicator changes line colors according to slope and relative crossings, including crossings between the DEMA and corrected curve and around the floating levels. The example settings use a period of 25 and calculate floating levels over a period of 25, with the outer levels placed at 90% and 10% of the recent range. These settings are examples rather than validated defaults. The document explains the construction and display but provides no trading rules, comparative analysis, or backtest evidence, so it does not establish whether the correction improves signals or performance in any market.

Key ideas

• DEMA is presented as a way to reduce the lag of a conventional moving average.
• The correction flattens the DEMA-derived curve when its change is small relative to recent variability.
• Floating levels are calculated from the corrected curve’s recent high-low range.
• Color changes mark slope shifts and crossings involving the averages and floating levels.
• The document describes indicator mechanics but supplies no backtest or evidence that the signals improve trading results.

Tags

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