The Tillson T3 moving average and histogram

Tillson in Stocks & Commodities magazine

Tim Tillson’s article “Smoothing Techniques for More Accurate Signals” appeared in the renowned Stocks & Commodities magazine. In the article the Tillson moving average (also called T3 moving average) and the Tillson histogram are explained.

What are the advantages of the Tillson moving average?

Traders like the Tillson moving average because it has less lag and a considerably smoother curve compared to the more well-known averages such as the simple moving average or the exponential moving average.

Which versions exist of the Tillson moving average?

The Tillson moving average is available in two version: the standard version and the crossing version. In the simple mode the average is calculated one time from the close price and plotted as a single line. In the crossing version the average is calculated two times over two different horizons, and plotted as two crossing lines.

This example shows the standard version of the Tillson moving average. The line is green when the market trend is positive. The line is red when the market trend is negative.

Tim Tillson's moving average has several advantages.

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This example shows the crossing version of the Tillson moving average. When the fast T3 crosses the slow T3 upwards, the trend is positive. This is a buy signal. When the fast Tillson moving average crosses the slow Tillson moving average downwards, the trend is negative. This is a short sell signal.

The Tillson T3 crossing moving average.

Both Tillson moving average versions can be used to filter the trend (shown as a red or green background in the chart) and to give a trading signal.

What is the Tillson histogram?

The Tillson T3 histogram shows the difference between a short-term and a long-term Tillson moving average. The concept is similar to an MACD. When the value increases the trend is considered positive (bullish). When the value decreases, the trend is considered negative (bearish).

This example shows the Tillson histogram. The green background in the chart indicates the market trend is positive according to the histogram. The red background indicates the trend is negative.

The Tillson Moving Average histogram. This is similar in concept to the MACD.

The Tillson moving average in the trading platform

  • Open the chart of the instrument you want to trade.
  • In the WHS Proposals folder, select the Tillson T3 moving average indicator.
  • Define the settings in the Designer Dialog window.
  • Activate TradeGuard+AutoOrder or AutoOrder for automated trading.

Traders also read: 'Determining the trend with the Maximum-Likelihood indicator' and 'The 2-in-1 candles'