The ZMA™ is a truly unique indicator in that it is the most customizable moving average indicator to date. Its complex algorithm mathematically synthesizes the concepts of inertia, energy and continuity of price; resulting in a dramatically increased accuracy as compared to the lagging SMA, EMA etc.
Bottom Line: the ZMA™ is an extremely robust and powerful moving average methodology that renders the SMA, EMA, WMA etc. antiquated tools of trading past.
Virtually all the different moving average techniques have just one input setting ~ length or period. By incorporating the input filters of “Responsiveness” and “Inertia”, we at Fibozachi have overcome this coding limitation and created a superior moving average methodology.
This filter setting controls how high frequency and low frequency “noise” is filtered. In other words, it determines how reactive the moving average will be to fluctuations in price. Increasing the Responsiveness setting will decrease the amount of lag, which allows the ZMA™ to change direction / slope more frequently (increases frequency response). Decreasing the Responsiveness setting will make the ZMA™ less reactive to changes in price, resulting in fewer changes of direction / slope.
*** Note: a very high Responsiveness setting ( > 95+) will cause the ZMA™ to track price very closely; effectively ‘overriding’ the length or period setting.
This filter controls how high frequency and low frequency “noise” is amplified by customizing how ‘energy’ is calculated. By increasing the Inertia setting, smaller price movements will provide more ‘energy’ to the ZMA™. The cumulative amount of energy that has accrued over “X” amount of bars affects how the ZMA™ is calculated and plotted. Decreasing the Inertia setting means that smaller price movements are filtered and do not provide much additional energy to the ZMA™.
*** Note: A very high Inertia setting (150+) can result in excessive overshoot, in which the ZMA™ has too much energy and requires more of a price change in order to halt its path of motion.
The ZMA™ takes color-coding to the next level by giving traders the ability to choose exactly how and when the ZMA™ is colored. Like all proprietary Fibozachi technical indicator packages, we have designed the ZMA™ to be trader-friendly as well as graphically brilliant to help traders easily indentify its confirmed signals.
Slope Color Activation: With this feature enabled, the ZMA™ will be color-coded based upon the direction of its slope.
Green = ZMA is sloping upward ( ZMA > ZMA [1 bar ago] )
Red = ZMA is sloping downward ( ZMA < ZMA [1 bar ago] )
Price Color Activation: With this feature enabled, the ZMA™ will be color-coded based upon whether it is above or below the current bar’s closing price.
Green = Price closes above ZMA (Close > ZMA)
Red = Price closes below ZMA (Close < ZMA)
All proprietary Fibozachi technical indicator packages come fully loaded with complete visual and audio alerts; the ZMA™ is no exception.
Moreover, traders can easily enable or disable any of the following alerts:
Slope Alerts: Immediately issues an alert when the slope of the ZMA™ changes direction.
Crossover Alerts: Immediately issues an alert when price crosses above or below the ZMA™.
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