This is how to remove lag from moving averages. 1) Support Buy line 2) Early Buy Alert 3) Buy Confirmed.... Fire and Forget
I'm testing this currently, settings / rules....... Simplify needed!!! Envelope 10sma High +0.01% and Low -0.01%, direction to trade and range initially. Envelope 7Lwma High +0.03% and Low -0.03%, Range to trade along with the 10. SL can be 7lwma +/-0.03% based of based around the 10. Need to wait for a direction, sideways = lower odds and lower risk to reward.
Here is the 411 on moving averages and lag: Moving averages are lowpass digital filters. The two types are Finite Impulse Response (FIR) and Infinite Impulse Response IIR). An SMA is a type of FIR filter, and and exponential MA is a type of IIR filter. Lag is the common name for group delay. Group delay is the time delay of the various sinusoidal components of a signal, and is a function of frequency for each component. This immediately implies that the price time series is being modeled as a complex wave. There are many ways to reduce group delay (lag) in digital filters, but I will point you to the work of John Ehlers. As always, a caveat. Anything from the world of physics, applied to finance, could be a misapplication of the physics.
Physics follows universal laws, meaning that, so far as we have been able to test them, they apply everywhere and at every time, past, present and future. What is the universal law of physics that is being applied to lag?
How to remove lag from moving averages - depends on the platform. In TradeStation Format tab ---> Analysis Technique ---> highlight particular Indicator (MA in this case) ---> remove. No more lag.
Definition of group delay (lag): The negative derivative of phase with respect to frequency. Again, this implies that price is a complex wave with many different frequency component waves. It's just a model remember and thus the caveat.
Knowledge is king. I need the the lag so all the others who play with parameters get all the false signals. I have no problem waiting for middle swings.