The 3rd Generation Moving Average is a sophisticated upgrade of the traditional moving average (MA) indicator designed specifically for MetaTrader. This innovative tool employs a clever lag-reducing technique based on an extended MA period, which was first detailed by M. Duerschner in his insightful article, Gleitende Durchschnitte 3.0.
Using a lambda (λ) value of 2, this version optimally minimizes lag, ensuring that your signals are more timely. Keep in mind that increasing the λ value will make it more similar to the classic moving average. This indicator is available for both MT4 and MT5 platforms and doesn’t require any external DLLs to function.
Input Parameters
- MA_Period (default = 50) — This sets the period for the 3rd Generation Moving Average.
- MA_Sampling_Period (default = 220) — This is the sampling period for the moving average and should be at least four times greater than the MA_Period.
- MA_Method (default = MODE_EMA) — This indicates the method used for calculating the moving average.
- MA_Applied_Price (default = PRICE_TYPICAL) — This defines the price type applied for the moving average.
As illustrated in the chart, the 3rd Generation MA (red line) demonstrates slightly reduced lag compared to the conventional EMA (blue line), allowing it to react to price movements more swiftly. However, it’s important to note that it can still experience lag and may generate false signals at times.
Overall, you can utilize the 3rd Generation Moving Average in a manner similar to the standard moving average — primarily to gauge the current trend direction. Happy trading!
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