Description

• Developed by Tim Tillson, T3 is a moving average which uses DEMA (Double Exponential Moving Average) as an input. It adds a Vfactor ,which lies between 1 and 0, to its calculation giving a function called Generalized DEMA (GD) calculated by using DEMA with a Vfactor (volume factor)
• GD with Vfactor 1 is the same as DEMA while that with 0 is similar to an EMA. The default value of Vfactor is 0.7
• Once this GD is calculated, T3 indicator smoothens the data series thrice by calling GD three times
• It was developed by the author to make DEMA less reactive to price changes as during non-trending market and give more effective signals

Interpretation

• Similar to other averages, T3 is also used for confirming trends and overall price direction
• The price line moving above T3 indicates an uptrend suitable for Buy trades
• The price line moving below T3 indicates an downtrend suitable for Sell trades
• T3 can be used with other indicators for getting crossovers and thereby signals

Default Parameters Used/Inputs

• Data line- Close line, High line, Open line, Low line or others
• Bars – number of bars for which T3 has to be calculated

Returns/Output

A highly smoothened T3 graph line

Formula

T3 = GD(GD(GD(n)))
Where, GD (Generalized DEMA) =
EMA(n)*(1+v) – EMA(EMA(n))*v