Trend-Adjusted Exponential Moving Average

Summary

This document describes an exponential moving average that can incorporate a smoothed trend component. Its settings are the EMA coefficient, the trend coefficient, a switch for enabling trend adjustment, and the price series to apply. The input price is described as a one-period simple moving average of the selected price, which effectively supplies the current value to the calculation.

The method updates the average using the current price and the previous adjusted average plus its trend estimate. It then updates the trend estimate from the change in the adjusted average and the prior trend. The document contrasts indicator plots with trend adjustment disabled and enabled, but supplies no numerical examples, performance tests, or trading rules. It therefore explains the calculation and configuration rather than establishing that the adjustment improves forecasts or returns. Parameter selection, initialization, and behavior across markets are not evaluated.

Key ideas

• The indicator combines exponential smoothing with a separately smoothed estimate of trend.
• The trend coefficient controls how quickly the trend estimate responds to changes in the adjusted average.
• Trend adjustment can be switched on or off, and the input price series is configurable.
• The document illustrates both settings but provides no evidence of trading performance.

Tags

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