A smooth (low noise) trend is more
efficient than a noisy trend. Given that RSX measures market trend direction
and efficiency, it stands to reason that RSX would respond better (display
larger dynamic range) when fed pre-smoothed price data. And there's no better
way to pre-smooth than by using 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.
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