Butterworth Filter

These are the 2 pole and 3 pole Butterworth Filters, which were described by John F. Ehlers in his book “Cybernetic Analysis for Stocks and Futures”.

Indicator Description

The Butterworth Filter is an alternative to the EMA and SMA. The idea is get a smooth average with a minimum of lag. We are looking to filter out “noise” and give you an indication of the market direction. The 2 pole filter (red) will give you a better approximation for price, whereas the 3 pole filter (blue) has superior smoothing.

The indicator is available for NinjaTrader 8.