The exponentially smoothed average assigns a greater weight to the more recent activity. It is therefore a weighted moving average. Mathematically, a single exponential smoothing Ls calculated as follows:
• X is exponential smoothing for the current period.
- C is closing price for the current period.
• Xp is exponential smoothing for the previous period.
• K is smoothing constant, equal to 2/n + I for CompuTrac and 2/n for BackTrac.
- n is total number of periods in a simple moving average, which Ls roughly approximated by X.
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