Smoothing the Choppy Market Index with Four Moving Averages

Summary

This document describes a smoothed version of the Choppy Market Index, intended to make its readings less jagged while keeping added delay acceptable. Users can choose among four averaging methods: simple, exponential, smoothed, and linear weighted moving averages. Setting the smoothing period to one or less disables smoothing.

The author says a comparison of the smoothed and regular readings shows a visibly smoother series, with acceptable lag even when using the simple moving average, which the document characterizes as the slowest of the available choices. No numerical evaluation, formal lag measurement, market examples, or trading rules are provided. Smoothing may improve readability, but it can also delay signals; the description does not establish whether this version improves trading results or how to use it in a strategy.

Key ideas

• The indicator applies a moving average to smooth Choppy Market Index readings.
• Available methods are simple, exponential, smoothed, and linear weighted averages.
• A smoothing period of one or less turns the smoothing off.
• The author reports a visual reduction in jaggedness and considers the added lag acceptable.
• The document gives no quantified comparison or evidence of improved trading performance.

Tags

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