The Moving Average - Using Reflection
The Moving Average - Using Reflection
One way to mitigate the digital filter lag inherent in a correctly plotted moving average is to 'reflect' the signal. Read how to do it in this article.
Fix the Inescapable Digital Filter Lag!
In our first look at the humble moving average we discussed how to correctly plot this popular trend indicator and how the vast majority of chartists today do not. We discussed it’s true operation, that of a low pass filter, or data smoother and the inherent digital filter lag resulting from the mathematical operation of averaging over a sliding window.
The filter lag is not unique to the moving average however, it is present in every filtering operation, at least in the time domain with a sliding window. The amount of digital filter lag can vary depending on the type of filter but the general rule is that it will always be present to some extent. The result of the digital filter lag are ‘edge effects’ at the start and tail of the data. As traders we are generally interested in the situation at ‘nowtime’, not least for timely entries.
