A smooth trend is more
efficient than a noisy trend. Given that RSX measures market trend direction and efficiency, it stands to reason that RSX would display larger dynamic range when price is pre-smoothed by JMA.
In one experiment, we used three different speeds of JMA to show how it affects RSX. The chart below shows three RSX plot lines, each with JMA set to an increasingly slower speed. Note how a slower JMA extends RSX plot range as well as decreases reversals. This gives the user another way to fine-tune RSX response to a particular market.
|