Parabolic Weighted Moving Average and Its Power Parameter

Summary

This note describes a weighted moving average whose price weights follow a parabolic curve. A power parameter controls the weighting pattern, extending the basic idea of a linear weighted moving average. The document explains two special settings: power zero produces a simple moving average, while power one produces a linear weighted moving average. Other power settings create intermediate or otherwise varied curves, though the note does not specify their exact formula.

Increasing the power gives more influence to the current price, making the average respond faster; lowering it makes the average slower. This offers a way to adjust responsiveness when using a moving average as a technical indicator. The explanation is conceptual and provides no chart, market example, performance evidence, or guidance for choosing a power value. It also does not discuss how the indicator behaves across different assets, sampling intervals, or market conditions.

Key ideas

• The indicator assigns price weights according to a curve controlled by a power parameter.
• A power of zero gives a simple moving average.
• A power of one gives a linear weighted moving average.
• Higher power settings increase the current price's influence and make the average respond faster.
• The note does not provide a formula or empirical evaluation for other power settings.

Tags

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