ALMA Smoothed Gaussian Moving Average

The ALMA Smoothed Gaussian Moving Average indicator provides a multi-layered trend-following framework that combines specialized smoothing techniques with momentum filters to identify high-probability market entries. By merging the Arnaud Legoux Moving Average (ALMA) with a Gaussian Adaptive Moving Average, the tool minimizes lag and filters market noise to produce precise trend signals.

Usage

The Usage section describes how the script can be used to interpret market trends and momentum shifts. The indicator primarily functions as a trend-following system where the relationship between the smoothed price data and the Gaussian line determines the market bias.

• Trend Identification: The indicator colors the price bars and the central EMA line. Green indicates a bullish trend, while red indicates a bearish trend.
• Basic Entry Signals: "B" (Buy) and "S" (Sell) labels appear when the ALMA-smoothed price crosses above or below the Gaussian Moving Average, signaling potential trend reversals.
• Strong Signals: The script integrates the Relative Strength Index (RSI) and Chande Momentum Oscillator (CMO). When a standard signal aligns with bullish/bearish momentum from both secondary oscillators, a vertical background highlight appears, indicating a "Strong Buy" or "Strong Sell" confluence.

Details

The ALMA Smoothed Gaussian Moving Average (ASGMA) is based on the original Gaussian Moving Average (GMA) concept by LeafAlgo, which applies weights to prices to prioritize recent data while smoothly tapering older values.

The ASGMA enhances this by applying an ALMA filter to the price source before it enters the Gaussian calculation. ALMA uses a Gaussian distribution offset by a specific sigma and offset parameter to provide superior smoothing with significantly reduced lag compared to traditional moving averages. Furthermore, the Gaussian component can be set to "Adaptive," where the standard deviation (sigma) used in the weighting process dynamically adjusts based on recent market volatility.

Settings

ALMA Smoothing

• Source: The price data used for calculations (e.g., Close, HL2).
• Smoothing: The lookback period for the initial price change calculation.
• Lookback: The period length used for the ALMA smoothing window.

Gaussian Adaptive Moving Average

• Length: The window size for the Gaussian Moving Average calculation.
• Adaptive Parameters: Enables or disables the volatility-adjusted standard deviation.
• Volatility Period: The lookback period used to calculate standard deviation when "Adaptive Parameters" is enabled.
• Standard Deviation: The fixed sigma value used if "Adaptive Parameters" is disabled.

FAQ

How do I interpret the background highlights? Vertical green or red background highlights represent "Strong" signals. these occur when the ASGMA crossover aligns with positive/negative momentum trends in both the RSI and the Chande Momentum Oscillator.

What is the difference between the labels and the line color? The labels ("B" and "S") mark the exact moment of a crossover, while the line and bar colors represent the ongoing trend state following that crossover.

How can I access the ALMA Smoothed Gaussian Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.