Tillson T3 Moving Average

The Tillson T3 Moving Average indicator provides a smoothed trend-following line that reduces lag and overshooting common in traditional moving averages by utilizing a triple exponential smoothing technique. This tool is designed to help traders identify trend direction and potential reversal points with greater clarity and less noise.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This section also focuses on how main settings affect the indicator interpretation and output.

• Trend Identification: When the price is above the T3 line, the trend is generally considered bullish, and the line (and optionally the bars) will typically turn green. Conversely, when the price is below the T3 line, the trend is bearish, and the visuals turn red.
• Support and Resistance: The T3 line can act as dynamic support in an uptrend or dynamic resistance in a downtrend.
• Dual Line Strategy: By enabling the secondary T3 line (T3-20), traders can look for crossovers between the fast T3 and slow T3 lines to confirm trend shifts or generate entry/exit signals.
• Bar Coloring: The indicator includes a bar-coloring feature that reflects the current trend state relative to the primary T3 line, providing immediate visual feedback on market sentiment.

Details

The Tillson T3 Moving Average is a sophisticated smoothing calculation originally developed by Tim Tillson. Unlike a simple moving average (SMA) or a single exponential moving average (EMA), the T3 passes the price data through multiple stages of EMA smoothing.

The core calculation involves a "Volume Factor" (vFactor), which determines how much the moving average reacts to price changes. A higher volume factor makes the T3 more responsive to recent price movements, while a lower value increases the smoothing effect. The script utilizes a weighted price source (high + low + 2 * close) / 4 to account for intraday volatility while emphasizing the closing price. The final T3 value is derived from a linear combination of multiple EMA layers (e1 through e6), significantly reducing the "lag" typically associated with high-period moving averages.

Settings

• T3 Length: The lookback period for the primary T3 calculation.
• Volume Factor: A multiplier (s) that controls the damping effect; higher values make the average more reactive.
• T3 Length 2: The lookback period for the secondary (slower) T3 line.
• Volume Factor 2: The volume factor specifically for the secondary T3 calculation.
• Tillson T3-20: A toggle to show or hide the secondary T3 moving average on the chart.
• Barcolor: A toggle to enable or disable the coloring of price bars based on the primary T3 trend.

FAQ

How do I interpret the color changes on the T3 line? The line changes color based on the relationship between the price and the T3 value. A green line indicates the price is above the average (bullish), while a red line indicates the price is below the average (bearish).

What is the benefit of the Volume Factor? The Volume Factor allows you to fine-tune the smoothness of the indicator. It provides a way to adjust the sensitivity of the moving average without changing the period length, helping to filter out market noise.

How can I access the Tillson T3 Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.