The Arnaud Legoux Moving Average (ALMA) is a modern type of moving average developed by Arnaud Legoux and Dimitrios Kouzis-Loukas. It was created to address common issues with traditional moving averages like lag and choppiness, offering a more balanced tool for smoothing price action without losing responsiveness.

What Makes ALMA Different

Reduced Lag: ALMA is more responsive than SMAs and EMAs, helping traders react quicker to price shifts.

Smoothed Output: Despite its responsiveness, ALMA reduces noise effectively, making it easier to follow trend direction.

Gaussian Weighting: It uses a bell-curve approach to give more importance to prices near the center of the calculation window.

Offset Control: You can shift the curve’s sensitivity forward or backward, allowing for customization between smoothness and reactivity.

Parameters

Length: Number of periods used in the calculation.

Sigma: Controls the width of the Gaussian curve (affects smoothness).

Offset: Adjusts where the weighting is applied (0 = start, 0.5 = center, 1 = end).

How to Use It in FX Replay

Trend Smoothing: Use ALMA to see trends more clearly without excessive lag.

Dynamic Levels: ALMA can act as a responsive support or resistance area during backtesting.

Signal Generation: Combine two ALMA lines or pair it with indicators like RSI or MACD for crossover-based signals.

This moving average works well in strategies focused on trend-following, reversion, or momentum.

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