Question 1

What is ALMA?

Accepted Answer

The Arnaud Legoux Moving Average (ALMA) uses a Gaussian (bell-curve) distribution to weight prices inside the lookback window. By adjusting the offset and sigma parameters, traders can fine-tune both the position of the weight peak and how sharply weights fall off, achieving a unique balance between smoothness and responsiveness.

Question 2

How it works

Accepted Answer

``` w_i = exp(-((i - offset × (N-1))^2) / (2 × (N / sigma)^2)) ALMA = sum(w_i × Close_i) / sum(w_i) ``` - **offset** shifts the peak of the Gaussian curve (0 = oldest bar, 1 = newest bar). - **sigma** controls the width of the bell curve (smaller = narrower, more focused weighting).

Question 3

Key features

Accepted Answer

- **Gaussian weighting** — produces a very smooth line with minimal overshoot. - **Tunable lag** — adjust `offset` to move the weight emphasis between old and new prices. - **Low noise** — sigma controls how aggressively older data is discounted.

Question 4

Trend direction

Accepted Answer

- Price above ALMA — bullish bias. - Price below ALMA — bearish bias.

Question 5

Slope

Accepted Answer

- Rising ALMA slope — strengthening uptrend. - Falling ALMA slope — strengthening downtrend. - Flat ALMA — consolidation or range-bound market.

Question 6

Parameters

Accepted Answer

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 9 | Lookback window size | | Offset | 0.85 | Gaussian peak position (0..1). Higher = more weight on recent prices | | Sigma | 6 | Gaussian width. Smaller = sharper curve, more focused |

Question 7

Example conditions

Accepted Answer

| Condition | Meaning | |-----------|---------| | `close > ALMA(9)` | Price is above ALMA — bullish | | `close cross_over ALMA(20)` | Price reclaims ALMA — potential reversal up | | `ALMA(9) cross_over SMA(20)` | ALMA crosses above SMA — early momentum shift |

Question 8

Tips

Accepted Answer

- Default parameters (9, 0.85, 6) work well for most markets. - Increase sigma for smoother output or decrease for faster reaction. - ALMA excels at identifying trend direction without the whipsaw common in EMA. - Compare ALMA to KAMA — both adapt to market conditions but use different mechanisms.