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Moving Averages
The moving average technical indicator in Investor/RT now supports nine distinct moving average types. Four new moving average types were added to Investor/RT 3.8. The Adaptive Moving Average is described in detail on p. 34 of the 1998 Bonus Issue of Stocks and Commodities Magazine, while the other 3 moving averages are described in detail in the June 1999, p. 18.
The new types are:
Adaptive Moving Average - This moving average moves
slowly when prices are moving sideways and moves swiftly when prices move swiftly.
Triangular Moving Average - The triangular moving
average derives its name from the way the weighting factors are applied to the un smoothed
data. For example, for a 7 period moving average, the weighting factors are 1, 2, 3, 4, 3,
2, 1.
Endpoint Moving Average - The endpoint moving average
uses a least squares (linear regression) fit to derive each point on the moving average
line based on the preceding period.
Sine-Weighted Average - The sine-weighted moving
average is similar in concept to the triangle moving average, but the weighting factors
are based on a sine calculation instead.
These new moving averages may be used as overlay indicators showing the moving average of
some price type for an instrument, or they may be used as smoothing options in conjunction
with other technical indicators. For example, the Adaptive moving average could be used to
smooth the CCI, RSI, or MACD indicator.
The five pre-existing moving averages are Simple, Weighted, Exponential, Welles Wilder, and Least Square.