Third-Generation Moving Average: Faster Response with Remaining Lag

Summary

The document describes a third-generation moving average indicator and compares it with a conventional exponential moving average. It says the third-generation version responds to price changes somewhat faster and has slightly less lag, while still remaining prone to lag and false signals. The applied-price input is configurable, with typical price given as the default.

The suggested use is the same as for a standard moving average: interpreting the current direction of a trend. The material provides no calculation method, chart evidence, parameter study, or backtest, so it does not establish whether the reduced lag improves trading results or how often the indicator produces false signals. It is a brief indicator description rather than a developed trading system.

Key ideas

• The indicator is presented as having slightly less lag than a conventional EMA.
• It is described as responding more quickly to price changes but can still lag and give false signals.
• The applied price can be selected, with typical price specified as the default.
• Its proposed use is to help identify the current trend direction.

Tags

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