CoRA Ribbon - Multiple Compound Ratio Weighted Moving Averages

The CoRA Ribbon - Multiple Compound Ratio Weighted Moving Averages indicator provides a low-lag trend-following system by combining up to five waves of compound ratio weighted moving averages to identify market momentum and trend shifts with high accuracy.

Usage

The Usage section focuses on interpreting the ribbon's visual cues and adapting the waves to specific trading styles.

Trend Identification

The primary method of using the CoRA Ribbon is monitoring color transitions:

• Bullish Signal: When the ribbon turns green, it indicates that a specific number of CoRA waves have aligned in an upward direction.
• Bearish Signal: When the ribbon turns red, it suggests the waves have aligned in a downward direction.

Ribbon Logic

The indicator features three distinct ribbons that can be toggled:

• Ribbon 1: Fills the space between Wave 1 and Wave 2. It changes color only when both waves point in the same direction.
• Ribbon 2: Fills the space between Wave 4 and Wave 5, acting as a slower trend filter.
• Ribbon 3: Fills the space between Wave 1 and Wave 5. The direction is determined by a user-defined threshold (e.g., at least 3 out of 5 waves must align to change the ribbon color).

Strategy Adaptation

Users can adjust the individual lengths of the five waves to suit different timeframes. The default settings are optimized for timeframes lower than 15 minutes. For higher timeframes (1H, 4H, Daily), increasing the lengths of the waves can provide a smoother, more reliable baseline for long-term trend analysis.

Details

The CoRA (Compound Ratio Weighted Moving Average) is based on a concept originally introduced by RedKTrader. Unlike a standard Linear Weighted Moving Average (WMA) where the weight increase is arithmetic, or an Exponential Moving Average (EMA) where weights decay exponentially, CoRA uses "logarithmically linear" weighting.

In a standard WMA of length 5, the weights are 1, 2, 3, 4, 5. The ratio between the weights is inconsistent (e.g., 2:1 for the first two points, but 5:4 for the most recent). CoRA addresses this by ensuring the "step ratio" between weights remains consistent throughout the lookback period. By starting with a small initial weight and applying a compound ratio, the indicator significantly reduces "tail weight" from older data points. This result is a moving average that tracks price fluctuations more closely with significantly less lag than traditional moving average types.

Settings

General

• Compound Ratio Multiplier: Adjusts the intensity of the weighting ratio.
• Auto Smoothing: When enabled, automatically calculates smoothing based on the square root of the wave length.
• Manual Smoothing: Sets a custom smoothing value if Auto Smoothing is disabled.
• Moving Average Type: Choose between SMA, EMA, or WMA for the underlying smoothing calculation.

Waves

• Wave 1-5 Visibility: Toggles the visibility of individual waves.
• Wave 1-5 Source: Sets the price source (e.g., OHLC4, Close) for each individual wave.
• Wave 1-5 Length: Sets the lookback period for each compound ratio calculation.

Ribbons

• Ribbon 1-3 Visibility: Toggles the visibility of the background fills between waves.
• Ribbon 3: Required Waves for Direction: Defines how many waves (3 to 5) must align in the same direction to trigger a color change in the main ribbon.

FAQ

How does CoRA differ from a standard EMA? CoRA utilizes consistent compound ratios for weighting rather than exponential decay. This allows it to react faster to price changes while maintaining a smoother profile than a simple moving average.

Can I use this for scalping? Yes, the default settings are designed for lower timeframes (under 15 minutes), making it suitable for identifying quick trend shifts during scalping sessions.

How do I access the CoRA Ribbon? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.