RedK Smooth And Lazy Moving Average (SALMA)

The RedK Smooth And Lazy Moving Average (SALMA) indicator filters out extreme price noise using a volatility-adjusted calculation to provide a clearer visualization of the underlying market trend.

Usage

The SALMA tool is primarily used as a trend-following guide that ignores minor price fluctuations. Traders can use it to determine market bias: long positions are typically favored when the price is above the SALMA line, while short positions are favored when the price is below it. Because the indicator only reacts to "persistent" price moves, it reduces the frequency of whipsaws in choppy markets.

The indicator also includes two optional standard moving averages (SMA, EMA, or WMA). These can be enabled to create a crossover system or to monitor significant institutional levels alongside the SALMA line. The tool is compatible with any timeframe and can be applied to higher timeframe data on a lower timeframe chart for multi-timeframe analysis.

Details

The SALMA calculation follows a specific logic to achieve its "lazy" (smooth) characteristic:

1. Volatility Filtering: The script calculates a baseline using a Weighted Moving Average (WMA) and creates a channel based on a user-defined Standard Deviation (SD) width.
2. Price Correction: The raw price is "corrected" or capped. If the price exceeds the upper or lower SD boundaries, it is restricted to the boundary value. This acts as a pre-smoothing mechanism that neutralizes sudden, high-volatility spikes.
3. Double Smoothing: The corrected price is then processed through a primary WMA and a secondary smoothing WMA to produce the final SALMA line.

This construction ensures that only price movements that are sustained and significant enough to shift the volatility channel will affect the direction of the moving average.

Settings

• Source: The price source used for all calculations (e.g., Close, HL2).
• Length: The period used for the primary Weighted Moving Average calculation.
• Extra Smooth: Sets the length of the additional smoothing layer; a value of 1 disables extra smoothing.
• Volatility Filter (SD Channel):
  • Width: The multiplier for the Standard Deviation channel used to cap price outliers.
  • Length: The period used to calculate the volatility baseline and standard deviation.
• Optional MAs:
  • MA #1 / MA #2: Toggles the visibility of additional reference moving averages.
  • Type: Selection between SMA, EMA, or WMA for the optional lines.
  • Source: The input source for the optional lines.
  • Length: The period for the optional lines (e.g., 50 or 200).

FAQ

How does SALMA differ from a standard Moving Average?
Unlike standard moving averages that factor in every price point equally, SALMA caps extreme price spikes based on volatility before averaging, resulting in a line that is less reactive to "noise" and more focused on trend persistence.

Can I use this for crossover signals?
Yes, by enabling the optional MA #1 or MA #2 in the settings, you can identify crossovers between the smoothed SALMA line and traditional moving averages like the 50-period SMA.

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