Charting and Studies User Guide - CQG.com

Page 290
First value SMOOTH(1) = AccumulatedPrice / Period where AccumulatedPrice is a sum of Period
input prices.
Next value (say SMOOTH(N)) is calculated as:
SMOOTH(N) = SMOOTH(N-1) + (Price(N) - SMOOTH(N-1)) / Period
The next value would be plotted at the fourth bar from the left side of the screen.
SMOOTH2 = (PREVIOUS SUM - PREVIOUS AVG + PRICE 4) / PERIOD
For the second calculation of SMOOTH, PREVIOUS SUM is the sum of PRICE 1 + PRICE 2 +
PRICE 3; and PREVIOUS AVG is the initial value of SMOOTH.
The next value would be plotted at the fifth bar from the left side of the screen.
SMOOTH = (PREVIOUS SUM - PREVIOUS AVG + PRICE 5) / PERIOD
Subsequent values would be determined by subtracting the PREVIOUS AVG from the PREVIOUS
SUM, adding the next more recent PRICE, then dividing by the PERIOD.
Example:
If the values 1,2,3,4 and 5 were reported for the first 5 bars the 3-period smoothed moving
averages for those bars would be calculated as follows:
(1+2 +3)/3 = 2
This is the first value and would be plotted on the 3rd bar from the left.
(6 - 2 + 4)/3 = 2.67
This second value would be plotted on the 4th bar from the left.
(8-2.67+5)/3 = 3.44
This third value would be plotted on the 5 th bar from the left.
Exponential Moving Average Calculation
For the following example the PERIOD = 3 and the PRICE = CLOSE.
To calculate an Exponentially Smoothed Moving Average, (ESMA), the user must enter an
integer value for the PERIOD or a decimal value Smoothing Constant.
A decimal value Smoothing Constant must be greater than 0.0 and less than or equal to 2.0.
Example: .5
When an integer value is entered for PERIOD, the smoothing constant is converted by the
system to a decimal value using the following formula:
Smoothing Constant:
= 2 / (PERIOD + 1)
= 2 / (3+1)
= 2 / 4
= .5
The Exponentially Smoothed Moving Average, ESMA, may be calculated after the Smoothing
Constant is known.
The first ESMA value is initially set to the first PRICE before the calculation begins. The first
PRICE is from the leftmost bar on the screen.
Basic Studies