Kalman Filter
A smoother trend estimate that fights lag.
The Kalman filter draws a smoothed estimate of “true” price, filtering out noise while reacting faster than a traditional moving average.
Why it’s different
- A moving average is always late — it’s a lagging average of the past.
- A Kalman filter continuously corrects its estimate as new prices arrive, so it tracks turns with less lag and less whipsaw.
How to use it
- Use the Kalman line as a dynamic trend reference — direction and slope show the prevailing bias.
- Price crossing the line, or the line changing slope, can flag a shift earlier than an MA cross.
Tip: Smoother than price, faster than an MA — a good middle ground when MAs feel too sluggish but raw price is too noisy.