FREE INDICATOR: Laguerre Moving Average by TheLark

The Laguerre Moving Average indicator provides a low-lag trend-following solution designed to identify major trend changes more rapidly than traditional Simple or Exponential Moving Averages. By utilizing John Ehlers' Laguerre filter mathematics, the tool minimizes the inherent delay found in standard smoothing methods while remaining resilient against minor price noise.

Usage

The Laguerre Moving Average (LMA) can be used as a direct replacement for standard moving averages (SMA/EMA) to identify trend direction and potential entry or exit points. Traders typically look for the slope and color of the line to determine the current market bias: a rising green line indicates a bullish trend, while a falling red line indicates a bearish trend.

The script also features trend change markers. When the LMA changes direction, a dot appears on the chart to highlight the pivot. This can be used to signal the start of a new trend or the exhaustion of an existing one. Users can integrate these signals into various strategies, such as trend-following systems or as a filter for mean-reversion setups.

Details

The Laguerre Moving Average was developed by John Ehlers and is based on a four-element Laguerre filter. Unlike traditional filters that rely on a fixed lookback period (length), the LMA utilizes a "Gamma" coefficient. This mathematical approach allows the indicator to track price movements with significantly less lag than an EMA of comparable smoothness.

The calculation involves four recursive levels (L0 through L3), which are then combined into a weighted average: (L0 + 2*L1 + 2*L2 + L3) / 6. This specific weighting creates a smooth output that reacts quickly to price shifts at the start of major trend changes.

Settings

• Gamma: Adjusts the sensitivity of the average. Higher values increase the smoothing (simulating a longer length) but introduce more lag, while lower values make the average more reactive to price changes.
• Show dots?: Toggles the visibility of the trend change markers that appear when the LMA changes its directional slope.

FAQ

How do I access the Laguerre Moving Average?

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

How does Gamma relate to traditional Moving Average lengths?

While there is no direct 1:1 conversion, increasing the Gamma value effectively increases the "length" of the filter. A Gamma of 0.8 is generally considered a "slow" setting, while values below 0.5 are considered very fast and reactive.

Can I use this indicator for crossover strategies?

Yes, the Laguerre Moving Average can be paired with price action (price crossing the LMA) or another LMA with a different Gamma setting to create crossover signals with less lag than traditional moving average crosses.