Arnaud Legoux Moving Average (ALMA)

Parameters: period = 9 (2–100) • offset = 0.85 (0–1) • sigma = 6 (0.1–50)

Overview

The Arnaud Legoux Moving Average (ALMA) was created by French mathematicians Arnaud Legoux and Dimitris Kouzis-Loukas in 2009. It uses Gaussian distribution to filter market noise, providing a smoother trend line than traditional moving averages while aiming to be both responsive and smooth, reducing lag and noise simultaneously.

What makes ALMA unique is its specific design to use Gaussian distribution that is shifted with a calculated offset, biasing the average towards more recent days instead of being evenly centered on the window. This variable-width Gaussian adapts to market volatility, giving more weight to recent prices while maintaining exceptional smoothness.

Interpretation & Trading Signals

Trend Following Signals:

  • Uptrend: Price remains above ALMA line - favorable buying opportunity
  • Downtrend: Price stays below ALMA line - potential selling opportunity
  • Dynamic Support/Resistance: ALMA acts as moving support in uptrends, resistance in downtrends
  • Trend Strength: Steeper ALMA slope indicates stronger trend momentum

Reversal Signals:

  • Bearish Reversal: ALMA crosses from above to below price - beginning of bearish trend
  • Bullish Reversal: ALMA crosses from below to above price - start of bullish trend
  • Multi-Indicator Confirmation: Combine with RSI or MACD to reduce false signals

Optimal Settings for 2025:

  • Window Size: 50 periods recommended (default 9 for shorter-term)
  • Offset: 0.85 recommended - balances recent price bias with smoothness
  • Sigma: 6 (Six Sigma inspired) - not recommended to change
  • Asset-Specific: Reduce window for crypto/volatility, increase for forex/blue-chips

Example Usage

Code examples will be available once the Rust implementation is complete.

Performance Analysis

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