Wilder’s Smoothing Average and Its Recursive Update

Summary

The document describes Wilder’s Smoothing Average, a recursive moving average controlled by a period and an applied price. Each new value adjusts the previous average by a fraction of the difference between the current applied price and that prior average. The adjustment fraction is the reciprocal of the selected period.

This update gives the series a smoothed response to new prices while retaining information from the prior average. A longer period makes each update smaller, while a shorter period gives the current price more influence. The note specifies the recurrence but does not explain how the initial average is seeded, compare the indicator with other moving averages, or provide examples, trading rules, or evidence of performance. Those omissions matter when reproducing values across implementations and when deciding whether the indicator is useful for a particular strategy.

Key ideas

• The average is updated recursively from the applied price and the previous average.
• The update weight is the reciprocal of the chosen period.
• A larger period reduces the influence of each new price observation.
• The document does not specify initialization or demonstrate trading performance.

Tags

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