3rd Generation Moving Average is custom indicator for the MetaTrader trading platform. An advanced version of the standard moving average (MA) indicator, which uses a fairly simple procedure to reduce the time lag by increasing the moving average period. The method was first described by Manfred Durschner in his article Gleitende Durchschnitte 3.0 (in German). 3rd Generation Moving Average indicatior implementation uses λ = 2, which gives the best lag reduction effect. Higher λ increases the similarity with the classic moving average line. The indicator is available for both MT4 and MT5.
MA_Period (default = 50) - 3rd Generation Moving Average period.
MA_Sampling_Period (default = 220) - moving average sampling period. Must be at least 4 times greater than MA_Period.
MA_Method (default = MODE_EMA) - moving average method.
MA_Applied_Price (default = PRICE_TYPICAL) - price type for calculating the moving average.
How to trade with 3rd Generation Moving Average Indicator
As you can see, the 3rd generation moving average (red line) shows less lag compared to the regular exponential moving average (EMA, blue line) and reacts faster to price changes. Unfortunately, it still has some latency and can give false signals. You can use the 3rd generation moving average indicator on Forex in the same way as a standard moving average - to determine the current direction of the trend.
How to download and install an indicator
In order to install the indicator on your MT4 or MT5 platform, you need to follow these steps:
- Click on the “Download Indicator” button located at the bottom of the screen.
- Save the file to your computer.
- Extract and move the files into the MT5>Indicator folder of the MetaTrader4 software file directory.
- Restart your Metatrader platform.
- Navigate to “Indicators.”
- And select the “3rd Generation Moving Average” template to apply it on the chart.
Note: This indicator was developed by a third party. AtoZ Markets does not carry any copyrights over this trading tool.