ALMA Function - Arnaud Legoux Moving Average

The ALMA Function - Arnaud Legoux Moving Average indicator provides a highly responsive moving average calculation that utilizes a Gaussian distribution to reduce lag while maintaining superior smoothness for trend analysis.

Usage

The Usage section describes how the script can be used, providing a flexible alternative to standard moving averages for trend identification and signal generation.

Traders utilize the ALMA to identify the primary trend direction with minimal delay compared to Simple Moving Averages (SMA). For instance, a common application is to monitor price crossovers; when the price crosses above the ALMA line, it may signal an emerging bullish trend, whereas a cross below may indicate bearish momentum. Because this implementation supports series-based lengths, it can be used in advanced technical setups where the lookback period dynamically adjusts based on market volatility or other indicators.

Details

The ALMA calculation is based on a Gaussian filter shifted by an offset to regulate the trade-off between smoothness and lag. This specific implementation was developed to overcome limitations in built-in charting functions—specifically the inability to accept series-based variables for the length parameter.

The math involves calculating weights using a normalized Gaussian distribution:

1. Offset (m): Determines the peak of the weight distribution within the window.
2. Sigma (s): Controls the width or "tightness" of the Gaussian curve.
3. Weighting: The function applies these weights to the price series to produce a value that is more representative of current price action without the typical noise found in standard averages.

This script also addresses a minor floor-logic discrepancy found in some built-in platform versions, ensuring the output adheres strictly to the original Arnaud Legoux mathematical design.

Settings

• ALMA Source: Determines the input data for the calculation, such as Close, Open, High, or Low.
• ALMA Length: Sets the window size for the calculation; higher values result in a smoother line with more lag.
• ALMA Sigma: Adjusts the standard deviation of the Gaussian distribution, impacting the sensitivity of the filter.
• ALMA Offset: Controls the weight distribution peak; a higher offset moves the weight closer to the most recent data to minimize lag.

FAQ

How does ALMA differ from an Exponential Moving Average (EMA)? Unlike the EMA which uses exponential decay, the ALMA uses a Gaussian distribution that can be shifted, allowing it to be more responsive to recent price changes while filtering out more market noise.

Can the length of this ALMA change dynamically? Yes, unlike standard built-in ALMA functions, this version is coded to allow for series-length inputs, making it compatible with adaptive trading systems.

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