We are all using averages for market assessment. One of the ways averages are used is using the change of the slope of the average as a signal. But that way tends to produce a lot of signals in ranging market. One of the way to lessen that number of signals is to filter out insignificant changes in average.
It is using fixed "step" change in pips as a filter. If the average does not changes for more than the required step, the value of the average remains the same. Otherwise it is changed in order to reflect the nearest value based on the required steps. Averages supported are the following:
- simple moving average (SMA)
- exponential moving average (EMA)
- smoothed moving average (SMMA)
- linear weighted moving average (LWMA)
You can use the color changes as signals.