This indicator uses the Least Squares Moving Average (LSMA) in tandem with the Arnaud Legoux Moving Average (ALMA) and Hull Moving Average (HMA) to generate buy-sell signals, represented by the light blue and orange crosses respectively.
The yellow lines produced by the indicator show periods of market uncertainty and possible reversal, and a modified, user-defined VWAP is given along with a 200 EMA. The point of this indicator was to create a smoother, more visually appealing moving-average, price action-based indicator when compared to the trend-step and simple moving average indicators available. This indicator uses a fast (25 period) LSMA coupled with a slower (50 period) HMA and ALMA in order to make signals both smooth and fast.
This indicator will work on all markets, except the modified VWAP will naturally not function if the volume is unpublished for that market. Use of this indicator will be very strong in trending markets, as the yellow line will spot possible reversals quite early, meaning the trader can be ready early for the buy/sell signal to appear. Use of this indicator in sideways market conditions will be limited, as it is for all moving average-based indicators, but the damage will be minimal as bad trades will be quickly realized by the indicator and the color will switch to yellow, this is possible because of the settings differences between the period lengths of the LSMA vs the ALMA + HMA.
Props ! Well done. With a few alternative settings I have created your indicator into a monster. Well done! Been look for this type of indicator for a few weeks now
Greets , Have been looking for single platter indicator catering to stats model applied in exploring few of varied types of moving averages ,naming a few of & their related mathematical models #linear regression (LSMA) #Derivation of simple from SMA(HULL MA ) #Gaussian regression analysis (ALMA)
I would be indebited if you could enlighten on detailed explanation in regards to # Importance of plot and what it stands for ? # VWAP on 200 EMA & its cursory role in this indicator # Preferences for any of the above 3 for equity trading in intraday (15 min chart ,1 hr chart ) & settings tweak if suggested would be highly appreciated
Regards,
Jaerevan47
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@Nimishshah, The plot is very simple, blue crosses indicating a switch from red/yellow --> green or green/yellow --> red coloration of the moving average. I simply use the plotted crosses as buy/sell signals. The thin blue line that is a simple vwma is used most effectively to find areas of support/resistance. The most simple and effective usages of the vwma are to look for crossovers between it and the 200ema or the plotted lsma and to use as a limit for placing orders. Since publishing this indicator, I have found that a 10/20/20 setting works best for intraday trading instead of the default 25/50/50 for settings "LSMAlen" "HMAlen" and "Window Size" respectively.
Nimishshah
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@Jaerevan47, Truly appreciate that insight shared by you
# Do you suggest 10/20/20 settings for optimal entry in : swing (5-7 days holding ) ,intraday trades & if yes ,what would be preferred time frame ( 5,15 mins) ? & if no what would be preferred settings for swing and intraday ?
# your preference for combined(if any ) over LSMA,HULL MA,ALMA.If LSMA in your view has edge over combined /HULL MA /ALMA ,what are the salient observations in your view for that preference for swing and intraday trades ?
# We use Heikin ashi candles for price plot .Any tweaks in optimal entry over conventional candles we need to be aware in your system , kindly enlight nuances ,if any
Regards
Jaerevan47
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@Nimishshah, To be totally honest, I don't think that the timeframe is particularly important, and you can easily adjust the settings. Typically, I like to keep the LSMAlen to be half of the other 2 settings which gives a good buffer for detecting false movements. In my opinion, a smoothed LSMA (smoothed using a short ema as source) is the best moving average as it is fast, fairly smooth, and produces few false signals with turn around points being very easy to spot. For trading, obviously there are 3 options, price crossovers, short/long LSMA crossovers, and LSMA turn-arounds, which is what this indicator observes. All 3 options work for trading, and I'd recommend using them in tandem. Naturally, price crossovers will be the earliest but least reliable signals, and then the short/long crossover is likely to occur next. This is a very early, solid signal in my opinion which I use in my other script "Ratings algo". I would recommend not using Heiken ashi candles because.. weird... things happen when you combine strategies with Heiken ashi. Heiken ashi is really only suited for usage by itself just like Renko. Tradingview has a whole page on the implications of combining indicators with Heiken ashi, as it gives unrealistic projections.
My best recommendation though is to use my script Ratings Algo, which is newer, has a lot more features, and is more of a one-stop system for trading.