ALMA Indicator Explained Simply and Understandably -- with David Moadel
hello friends and welcome to looking at the markets with David Modell you might
be thinking that you're looking at normal moving averages right now you
might be thinking oh those are moving average crossovers well they might be
moving averages but they're not regular old normal moving averages no they are
are not Legault moving averages are not Legault moving average al-ma it's the
alma indicator it's a special type of moving average and the idea behind these
particular moving averages is that they're supposed to be smoother meaning
that they're less susceptible to market noise or small price movements and also
they're supposed to be less laggy so in other words more responsive to the price
action of the actual candlesticks or in other words they go where they're
supposed to go quicker than a regular moving average I'm not saying this is
all necessarily true but this is what's supposed to be true
okay so smoother and less laggy than regular moving averages
that's the Arnaud logo moving average and we have two of them up there and I
want explain really quickly what these three numbers for the settings mean and
also I'll show you how you can find it on trading view but you got three
numbers here for the Alma indicator window size offset and Sigma ok window
size offset and Sigma now in order to explain all three of those this would be
a very long video so I don't see really any point and going to too much detail
on what those mean but just be aware that if you go to settings on trading
view you can adjust these three parameters here and I invite you or I
encourage you to play around with these numbers okay mess around with them and
see you know how it effects where the lines are okay especially if you want to
if you want to use Alma indicator moving average crossovers you don't want to use
exactly the same numbers on both of your lines otherwise
I'll just be on top of each other all right there needs to be a little bit of
difference between them and so you're going to want to play around with these
numbers until you get what you want okay so let's take one of them off so I'll
make one of them invisible here I'll just leave actually you know what yeah
the one I've got up there right now is the orange one and that is on the
standard settings nine point eighty five and six those are the standard settings
on tradingview for the window size offset and Sigma and this is a daily
candlestick chart for Home Depot just as an example and what you could do it
pretty much almost anything you can do with regular traditional moving averages
you can do with the Arnaud logo moving averages okay it's just a variation on
your normal moving averages it's it uses a different formula and different
parameters and so yes you could throw one Alma moving average up there and
then you could use it in the classical way you might use regular moving
averages like for example if a candlestick closes above the line then
you can go bullish and buy and ride it all the way up and don't sell or go
short until candlestick closes below the line and then don't buy again or go
along again until it candlestick closes above the line and then ride it all the
way up and then sell or go short when it closes below the line and so on and so
forth okay and that way you can enjoy significant upside when you get a nice
run like that and avoid some of the downside not all of it but some of the
downside when it you know when it starts to when the trend starts to go south
okay so that that's pretty much a simple way to use this indicator but again it's
not that different from regular old moving averages okay it's when you put
two of them up there that here we go all right so I've got one on the traditional
standards default settings and then I put another one up there and I played
around with the numbers and as you might be able to see you know I know it's kind
of small on your screen changed the second one you know the
purple Alma indicator to 3.95 and to so I'll repeat that the default one the
settings are nine point eighty five and six and then I have a second one up
there and it's on the settings 3.95 and two in case you're interested and so you
can use a moving average crossover or in this case a an Arnaud logo moving
average crossover okay so when the when the faster moving average crosses above
the slower one you can you know take a long position if you want to and ride it
all the way up and then don't sell or go short until the faster moving average
crosses below the slower one and then don't buy again until across is back
above it and ride it all the way up and then sell here you get the idea okay
and again you're allowing your winners to run and cutting your losers short so
you don't have too much loss you'll have some loss but not too much hopefully
when the trend turns downward okay so the strategies are not really that
different necessarily from regular moving averages it's just a different
type of moving average but now you have to deal with three parameters and so
you're gonna have to get used to that I recommend again playing around with the
numbers seeing what works for you you do not have to use the default settings
although I do kind of like the default settings which is an orange here okay
I like the distance between the default line here whoops a little bit of
advertising there I like the diff the the amount of space
between the line and the candlesticks that seems to work pretty well you get a
nice distance here you don't have the candlesticks exactly on top of the line
but they're not too far away either so the default setting seems to make some
sense but again I encourage you to play around with that alright so I hope this
was helpful for you and it's just a basic introduction or explanation for
the Alma indicator also I just want to show you how you get it at least on
trading view you go to indicator and strategies click on that and it's
not under Alma okay it's a our arnaud logo moving average right there they
spell it out here okay but if you're on a different platform that's okay you're
just going to have to you know either call tech support if you can't find it
or maybe they don't have it because it's not necessarily the most well known
indicator out there but hopefully this video can spread the knowledge a little
bit alright if you enjoyed this video feel free to please give me a like you
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lot I appreciate it I'll talk to you again soon