Using Adaptive SMA Crosses to Identify Trend Changes

Summary

This document presents an adaptive simple moving average intended to address a limitation of ordinary SMA-based trend signals. Because an SMA uses whole-bar periods, adapting its period can produce abrupt slope changes. The text argues that reading those slope changes directly may lead to frequent reversals in a trader’s interpretation. The adaptive SMA is described as faster than a regular SMA, making crosses between the two averages an alternative trend criterion.

The indicator offers two color-change approaches: coloring based on a slope change, or based on crosses between the adaptive and regular averages. A change in the adaptive average’s color can also be treated as a trend-change signal. The document says results seem acceptable but supplies no charts, backtest, parameter guidance, or quantified evidence. It therefore outlines a possible signal design rather than establishing its reliability across markets or conditions.

Key ideas

• Adapting an SMA can make its slope change abruptly because its period is tied to whole bars.
• The adaptive average is described as faster than the regular SMA.
• Crosses between adaptive and regular SMAs can serve as a trend criterion.
• Color changes may be driven by slope changes or by crosses between the averages.
• The document offers no quantified testing or guidance on market-specific settings.

Tags

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