2008issue C031-2
Parameter windows: exponential averages versus the alligator and Fibonacci lookbacks
An indicator period is a sampling-length choice. The archive says a wider window is more fluid and lagging, and that the length should be sorted against recent history rather than taken as a universal default.
- Widening any indicator window, including a moving average, makes the output more fluid and lagging, skips a considerable part of price motion before a signal appears, and suppresses insignificant fluctuations.
- An exponential moving average is described as more active than the alligator, reacting faster and producing more signals, including false ones.
- Fibonacci values 2, 3, 5, 8, 13, 21, 34, 55, 89, and 144 are proposed as candidate indicator periods; moving left on that list makes an indicator more active, and moving right makes it more fluent.
- Period selection is a trader-specific choice to sort with recent history, and the alligator is advised to be left unchanged rather than retuned.
A parameter window is a design choice
The sampling length of an indicator is its parameter window. Widening that window makes the output more fluid and delayed. The archive presents period selection as a trader-specific choice that should be sorted using recent history rather than a universal default.
Editorial reading from TradersWeek: treat the lookback as a design choice that trades faster reaction for more noise. Do not treat a default period as a law of the market.
What a wider window does
Widening any indicator window, including a moving average, makes the output more fluid and lagging. A wider period is said to skip a considerable part of price motion before a signal appears, while also suppressing insignificant fluctuations.
A moving average in this sense is a lookback smoother of ordered prices. A wider window increases lag and filters small fluctuations.
Exponential averages versus the alligator
An exponential moving average is described as more active than the alligator. It reacts faster and produces more signals, including false ones, because exponential smoothing weights recent observations more heavily.
The alligator is a multi-average setup. The archive explicitly advises leaving its published periods unchanged rather than retuning them.
Fibonacci values as candidate periods
Fibonacci sequence values 2, 3, 5, 8, 13, 21, 34, 55, 89, and 144 are proposed as candidate changes to an indicator period. Moving left on that list is said to make an indicator more active. Moving right is said to make it more fluent.
Editorial note from TradersWeek: those Fibonacci values are used here as candidate indicator periods, not as a price-level overlay.
All readings on this track · 17 readings
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- 2005Three removable gates for a long entry after a confirmed lower low
- 2005Why informal trend calling fails on a confused tape
- 2005Currency Fibonacci levels and overnight entry rules
- 2006Cycle and Fibonacci timing without trend context
- 2007Round-number reversals on equity-index charts
- 2008Parameter windows: exponential averages versus the alligator and Fibonacci lookbacks
- 2010A Dollar Index bounce as a failed-support, Fibonacci and volume test
- 2011A pre-trade checklist before Fibonacci entries
- 2012Fractal price growth and measured retracements
- 2015Scored reversals wait for a three-bar breakout
- 2016Intraday decision areas with Fibonacci and stochastic confirmation
- 2020One-to-one Fibonacci support on the February 2020 indexes
- 2020Fibonacci retracement levels fail a frequency test
- 2020A second-chance daytrade from the mean-reversion pivot zone