Laguerre Candles: Smoothing Open and Close with a Gamma Filter

Summary

This document describes a custom candle representation intended to smooth price fluctuations. It applies a four-stage recursive Laguerre-style filter separately to the open and a configurable custom close, then combines the stages with fixed weights to form the displayed candle body. The high and low remain the bar's original extremes. A gamma setting controls the smoothing response: lower values are more reactive, while higher values produce a smoother series.

The post compares the concept to Heikin-Ashi candles and presents indicator code, but does not provide chart examples, quantitative tests, or evidence that the representation improves trading decisions. The default gamma is zero, and the text does not explain how to choose a value, how the filtered series behaves in different market conditions, or how to use the candles as entry or exit signals. It is an indicator construction note, not a tested strategy.

Key ideas

• The candle body is formed from filtered open and custom-close series.
• Each series passes through four recursive stages combined with fixed weights.
• Gamma controls the balance between a more responsive and a smoother representation.
• The displayed high and low use the original bar extremes rather than filtered values.
• The document supplies no trading rules or performance evidence for the candle method.

Tags

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