V.7:3 (87-90): Moving averages and smoothing filters by John Ehlers

V.7:3 (87-90): Moving averages and smoothing filters by John Ehlers
Item# \V07\C03\MOVAVGS.PDF
Availability: In Stock

Product Description

Moving averages and smoothing filters by John Ehlers

Moving averages are perhaps the single most widely used technical trading tool. While averages are important tools, let's face itówe don't need computers to calculate them. Traders were using moving averages long before simple calculators were commonly available. Traders simply computed the averages by hand. Since we have the awesome power of sophisticated computers now at our fingertips, it's logical to imagine that we can harness this power to create a better smoothing filter than the averages we now use. I'll show that may not be so.

The object of a smoothing filter is to pass desired frequencies (like price cycles) and to reject the undesired frequencies such as "noise" or "jitter" in everyday market action. An exponential moving average (EMA) is a filter in this sense because it attenuates (that is, diminishes) the high frequency variations while retaining the desired lower frequency variations.

Exploiting the computer's power, we can increase the complexity of a filter's transfer response to create a "stonewall" filter that has a sharp cutoff response. Such a filter passes all signals below the cutoff frequency almost without attenuation and rejects nearly all signals above the selected frequency. Thus, low frequency waves, like cycles, are extracted from a series of prices while high frequency noise is cut out.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order