Adaptive Laguerre Filter (ALF) – The creator of Adaptive Laguerre Filter (ALF) is the famous John Ehlers. ALF is based on the Laguerre filter. The different thing between both is that ALF uses a variable gamma factor. In other words the filter used to track the previous bars are different than each other. Similarly, ALF tracks that are trending more closely but when it comes to ranging market change will be less.
Its fast adaptation ability makes this indicator one step ahead of others because ALF filters whipsaws.
The most commonly used parameters are:
Look-back = 20
Median = 5
Price Type = 4
How To Trade With Adaptive Laguerre Filter:
1. Buy Signal:
Buy when price goes above the ALF line
2. Sell Signal:
Sell when price goes below the ALF line
Important Note: DO NOT trade when ALF line is horizontal.