Arnaud Legoux Moving Average (ALMA) with ATR Bands

The ALMA indicator aims to give more reliable signals than other forms of MA's by eliminating (or smoothing out) small fluctuations in an asset’s price, thereby making upward or downward trends clearly visible. This in turn reduces price lag, meaning it creates a smoother line than most MA's. The ALMA does this by essentially applying a double MA, one moving in the standard left-to-right direction, and another moving right to left.

The Arnaud Legoux moving average was developed in 2009 by Arnaud Legoux and Dimitrios Kouzis-Loukas, who sought a solution that would generate more useful data than simple moving averages (SMA) and exponential moving averages (EMA). The pair was inspired to remove “noise” (i.e., inconsequential or misleading data) from price movement charts to provide smoother images. Many different forms of smoothed moving averages (SMMA) already existed, but Legoux and Kouzis-Loukas felt the results of these solutions still weren’t accurate enough.