T3MA
T3 Moving Average (T3MA) is an advanced type of moving average developed by Tim Tillson. T3 represents a thrice-smoothed exponential moving average (EMA) with a volume factor, making it smoother and less prone to false signals compared to traditional moving averages.
To use the indicator, you need to use the T3MovingAverage class.
Description
T3 Moving Average was developed to eliminate the drawbacks of traditional moving averages, such as lagging and false signals. Through multiple smoothing and an adjustable volume factor, T3MA provides a smoother curve that more accurately follows the price trend.
Main advantages of T3MA:
- Less lagging compared to ordinary moving averages
- Smoother curve with fewer false signals
- Adaptability to various market conditions due to the adjustable volume factor
T3MA can be used for:
- Determining trend direction
- Finding entry and exit points when price crosses the indicator line
- Building trading systems based on crossovers of multiple T3MAs with different periods
Parameters
- VolumeFactor - volume factor determining the degree of smoothing (usually a value between 0 and 1, recommended value is 0.7).
- Length - calculation period, similar to the period in ordinary moving averages.
Calculation
The T3 Moving Average calculation is performed in several steps:
Calculate six consecutive exponential moving averages with the same period:
EMA1 = EMA(Price, Length) EMA2 = EMA(EMA1, Length) EMA3 = EMA(EMA2, Length) EMA4 = EMA(EMA3, Length) EMA5 = EMA(EMA4, Length) EMA6 = EMA(EMA5, Length)Calculate T3 based on the obtained EMAs and volume factor:
c1 = -VolumeFactor^3 c2 = 3 * VolumeFactor^2 + 3 * VolumeFactor^3 c3 = -6 * VolumeFactor^2 - 3 * VolumeFactor - 3 * VolumeFactor^3 c4 = 1 + 3 * VolumeFactor + VolumeFactor^3 + 3 * VolumeFactor^2 T3 = c1 * EMA6 + c2 * EMA5 + c3 * EMA4 + c4 * EMA3
When VolumeFactor = 0, T3 becomes equivalent to EMA3 (triple EMA). When VolumeFactor = 1, T3 is maximally smoothed.
