PDF-Weighted Moving Average: Levels, Signals, and Smoothing Controls
Summary
The PDFma indicator is described as a weighted average or digital filter whose coefficients are derived from a probability density function. It offers floating levels, quantile levels, or no levels, with the last option enabling a slope-based mode. Color changes and alerts can be tied to crossings of outer or middle levels, or to a change in slope. It supports standard and Heikin-Ashi price inputs and multi-timeframe use.
The article focuses on two parameters that control responsiveness. Variance ranges from zero to one: reducing it makes the average faster but less smooth. Mean ranges from negative one to positive one and has a similar influence on its behavior. The document gives illustrative parameter comparisons but no formal performance results, trading rules, or validation across markets. It presents the indicator as a filter with room for experimentation, rather than evidence of a standalone strategy.
Key ideas
- PDFma computes a weighted average using coefficients based on a probability density function.
- Users can choose floating or quantile levels, or switch to a level-free slope mode.
- Signal alerts can follow level crossings or changes in slope.
- Lower variance makes the filter faster and less smooth.
- The document does not provide systematic performance evidence for trading signals.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.