Modular Filter - Spot Trends And Smooth Price

Introduction

This indicator can have a wide variety of usages, and since it is based on exponential averaging then the whole indicator can be made adaptive, thus ending up with a really promising tool. This indicator who can both smooth price and act as a trailing stop depending on user preferences, i tried to make it as reactive, stable and efficient as possible in order to both smooth and spot trends, lets view it more in depth.

The Indicator

line 8 and 9 create two bands, one upper and one lower, then based on certain conditions the indicator will only return a certain band or an average of both with different weights, this weight is controlled by the beta parameter, values of 1 will return a simple filter while values of 0 will return a classical trailing stop.

beta = 0

The indicator can use output values as input, thus using smoother values as input, in order to do so just check "Feedback", this help the overall output to be smoother as well as giving more long terms signals

The amount of feedback is controlled by the feedback weighting parameter, lower values will weight more the output values thus creating smoother results.

Feedback weighting of 0.2

Using beta = 0 thus having the indicator act as a trailing stop while having the feedback option activated return more long terms signals. Notes that the colors are based on the initial conditions of the indicator.

Conclusion

You can replace length and change alpha for any smoothing variable such as the efficiency ratio or anything with scale (1,0), same goes for beta and the feedback weighting parameter, this is why the indicator is "Modular" in addition of providing different usages. This indicator can look like cluster filters (smooth price monarch, forexguru), filters with the ability to follow the price quite fine while being stables. I really hope you find an use to it.

Thanks for reading !

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Update : Updated to version 4