Triangular Moving Average tool

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Trade Using the Triangular Moving Average – TMA

Description and Uses

Fred Heap / Unsplash

In stock trading, the triangular moving average (TMA) is a technical indicator that is similar to other moving averages. The TMA shows the average (or mean) price of an asset over a specified number of data points—usually a number of price bars. However, the triangular moving average differs in that it is double smoothed—which also means averaged twice.

A triangular moving average can be calculated using various input data, such as prices, volume, or other technical indicators. Triangle moving averages are most often applied to the price of an asset. The moving average overlays the price bars on a chart. It can also overlay the volume indicator if being applied to volume or any other indicator chosen by the trader. The TMA is the blue line in the SPDR S&P 500 chart example.

Triangular Moving Average Calculation

The triangular moving average (TMA) is an average of an average, of the last N prices (P).

Then, take the average of all the SMA values to get TMA values.

The TMA can also be expressed as: TMA = SUM (SMA values) / N

Luckily, you don’t need to calculate anything; trading software and charting packages crunch all the numbers for you.

Not all chart platforms have a TMA indicator. To see if yours does, open a chart. Then go to your indicators. Search for “Triangular Moving Average.” If it isn’t there, try applying a normal Moving Average (MA), then go into the setting for the MA and see if you can change its calculation to Triangular. Some platforms also label the TMA as “Moving Average Triangular” or “MovAvgTriangular.”

Another option is to apply an SMA (1) to your chart, and then apply another SMA (2) which uses SMA (1) as its input.

Triangular Moving Average Trading Uses

The purpose of the triangular moving average is to double smooth the price data, which will produce a line on your chart which doesn’t react as quickly as an SMA would. It can be advantageous or problematic, depending on what you are using the TMA for.

The TMA won’t react quickly in volatile market conditions—meaning it will take longer for your TMA line to change direction. If you are using the TMA as a trade signal, then the TMA may react too slowly.

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That the TMA lags can be a benefit though. If the price moves back and forth (range), the TMA won’t react as much, thus letting you know the trend hasn’t shifted. It takes a more sustained move in the price to cause the TMA to change directions.

If you want a moving average that responds quickly to price changes, the TMA is not it. A front-weighted moving average, exponential moving average (EMA), or even an SMA is likely a better choice if you are looking for a responsive moving average. The TMA is a good choice if you want an indicator that doesn’t react as much, or as often, to price changes.

Final Word on the Triangular Moving Average

A TMA is an average of an average, creating a line on your chart that typically moves in steadier and longer waves than an SMA. The TMA calculation is the SUM of SMA values, divided by the number of periods you want to average. The TMA reacts slower to price changes than other moving averages, such as the EMA and SMA. It can sometimes keep you in a trend longer, producing bigger profits. But when the trend does turn, the TMA will react slowly, which could mean you give up profits (could have gotten out earlier with another indicator).

There is no perfect indicator or moving average. It is all about how you use it. Test out the TMA for yourself before utilizing it with real capital. During your testing, use various settings and see if the indicator helps you make better trading decisions.

Triangular moving average (TMA) .

The purpose of this thread is more personal .

At some stage (some 4 years ago, posted it at this post : https://www.mql5.com/en/forum/175938/page17I ) coded one variation of an indicator that I named TMA centered. After that somebody shortened it’s name to TMA and ever since I am receiving emails and private messages about it in which people are asking me to make it non-recalculating, non-repainting, whatever .

These few posts are going to explain what TMA is and what TMA is not .

Triangular moving average .

First the good old triangular moving average.

It’s definition is fairly simple and one can be (among other places) be found here : Triangular Moving Average – Description of the Triangular Moving Average (TMA) . Here is how a normal triangular moving average looks like on a chart :

Now, at some stage of TA development people like Hurst and Brian Millard were thinking how can that be made better (since obviously there is a lag in the data that TMA is calculating – the most significant price in calculation is in the middle if the length so it is a half way from the current price, current price has less weight in that calculation) and they came to an idea that was already used in some other indicators : to “center” it.

Now centering is simply shifting values to the left on the chart by half length bars and after doing that it looks like this :

As it is obvious, by shifting it to the left, it fits perfectly the data but it starts lacking data from the right. And then comes in the centered version of triangular moving average .

Triangular moving average – centered .

In order t avoid that missing data, people have found out that it might be extrapolated (the missing data) and that is what is usually used as centered triangular moving average : TMA that is shifted by half length to the left and the missing data is extrapolated in a certain way. Here is how the usual centered TMA looks like :

The gap from the right is filled in and it all looks just fine. Except that there is no 100% exact way of extrapolating data. So, that extrapolated gap is a subject of changes no matter what extrapolation method one uses (otherwise I would be drinking coffee with Warren Buffett in the morning and not in my kitchen). There is no way to make it non-changeable (non-repainting). None . So much about the wonders of centered triangular moving averages : it is a good tool for estimation, but in no way should it be used in “signaling” mode since the signals are going t change

And for the end : one thing that is less known. The way how the centered triangular moving average is extrapolated makes the current bars value equal to one very well known moving average : linear weighted moving average. Current bar value of centered TMA is exactly the same as half length + 1 period LWMA. Here is an example at which it is obvious that at the end points they are exactly the same : red is the centered TMA and blue is the LWMA

And which makes the answer to the following question obvious : can it be “end-pointed” as SSA in order to make it non-repainting. The answer is yes and linear weighted moving average (LWMA) is the end-pointed centered TMA (so it is the non-repainting version of the centered TMA)

Now, that would be all. I just hope that my daily regular emails about TMA will lessen now that this is explained . As it is obvious, it is a fairly good tool for estimation (the work of Brian Millard regarding this subject is very significant and I recommend everybody that can read his book about to do so – it might help understanding what were they after) but there is no magic nor wonder in it.

Moving averages (MA) are a popular trading tool. Unfortunately, they are prone to giving false signals in choppy markets. By applying an envelope to the moving average, some of these whipsaw trades can be avoided, and traders can increase their profits. Envelopes trading has been a favorite tool among technical analysts for years, and incorporating that technique with MAs makes for a useful combination.

What Is an Envelope?

Moving averages are among the easiest-to-use tools available to market technicians. A simple moving average is calculated by adding the closing prices of a stock over a specified number of time periods, usually days or weeks. As an example, a 10-day simple moving average is calculated by adding the closing prices over the last 10 days and dividing the total by 10. The process is repeated the next day, using only the most recent 10 days of data. The daily values are joined together to create a data series, which can be graphed on a price chart. This technique is used to smooth the data and identify the underlying price trend. (Learning to analyze charts can be a big help when making trading decisions. Check out the Analyzing Chart Patterns tutorial to learn how.)

Simple buy signals occur when prices close above the moving average; sell signals occur when prices fall below the moving average. This idea is illustrated using a historical example in Starbucks shares (NASDAQ: SBUX) from back in 2007. Figure 1 indicates with the large arrows show winning trades, while the smaller arrows show losing trades when trading costs are considered.

Figure 1: The monthly chart of Starbucks shows that a simple moving average crossover system would have caught the big trends

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