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.
Other Library indicators
This category also includes the Adaptive Laguerre Filter, the Laguerre Filter, the Coral Filter, the Gaussian Filter, the Distant Coefficient Filter, the MAAF and the Supersmoother Filter. You may also review our indicators from the moving averages or the trend analysis categories, such as the Directional Movement Index, Zerolag TEMA, Zerolag HATEMA, Triple Weighted Moving Average, Sine WMA, Range Weighted Moving Average or the Efficiency Ratio. The Indicator Spotlight newsletter furthermore discussed the Kaufman Efficiency Ratio.
The Butterworth Filter is available for NinjaTrader 8.
