Trend & directionT3 Moving Average · T3
Tim Tillson's smoothed average that blends several EMAs with a volume factor for a clean, responsive line.
Works best in trending marketsEngine-computed on a fixed sample series
What the T3 Moving Average is
The T3 Moving Average, created by Tim Tillson, is a smoothing average engineered to be both smooth and responsive — a combination that ordinary moving averages struggle to achieve. A simple or exponential average that is smooth enough to ignore noise is usually sluggish and lags badly, while one fast enough to track price closely tends to be jagged and whippy. T3 attacks this trade-off by chaining several exponential averages together and mixing them with a tunable volume factor that reduces lag, producing a curve that flows cleanly yet hugs price more tightly than a single EMA. It is used wherever a trader wants a clean trend line or signal line without the jitter of a raw average. In effect it answers the question: can I have a moving average that is calm to look at but still quick to turn?
How it is calculated
T3 is built on the idea of a generalized DEMA, a double exponential average that subtracts part of the lag using a volume factor. Tillson chains this construction so that T3 is, in effect, a generalized DEMA applied three times over — six exponential averages combined in a weighted sum. The volume factor, typically set around 0.7, controls how aggressively the lag-reduction is applied: it sets the weights on the cascade of averages. A higher factor puts more weight on the lag-cancelling terms, making the line faster and more willing to overshoot, while a lower factor produces heavier smoothing that lags more. The length parameter sets the base period of the underlying exponential averages. So T3 has two knobs — the length and the volume factor — where a plain EMA has only one, and together they shape the balance between smoothness and speed.
Reading it, step by step
Read T3 exactly as you would any moving average, because that is what it is — a single flowing line. Its slope is the trend: rising means up, falling means down, flat means a range or transition. Price crossing above the T3 line is a bullish cue and crossing below a bearish one, though on a smooth average the cross tends to confirm rather than anticipate. A T3 line turning up after a decline, or two T3 lines of different lengths crossing, gives cleaner signals than the same reads on a jagged EMA because the smoothing removes the false wiggles. The volume factor changes the personality of the read: a higher factor makes the line hug price and turn quickly, so its signals come sooner but with more risk of a false turn, while a lower factor makes it deliberate and steady. Watch the slope and the crossovers, and interpret them in light of how you have tuned it.
Best timeframes and settings
T3 is flexible across timeframes and is a good choice wherever an EMA looks too noisy, from intraday charts up to the daily and weekly. A common configuration is a length in the 8 to 21 range with the volume factor at the default 0.7. Shortening the length or raising the volume factor makes T3 faster and more responsive, suited to active trading, but pushes it back toward the whipsaw it was designed to suppress. Lengthening the period or lowering the volume factor makes it smoother and slower, better as a trend filter for swing and position trading. The extra volume-factor knob is powerful but adds a tuning burden, so it pays to settle on a configuration that fits your instrument and stick with it. As a rule, use a smoother setting for a trend filter and a faster one for a signal line.
When and where to use it
T3 is a trend tool, most useful in markets that trend cleanly where a smooth average can define direction and provide low-noise crossovers. Use it as a trend filter to gate other signals, as a signal line for crossovers, or as a dynamic support and resistance guide that price respects during a trend. It works across liquid asset classes on trending charts. Because it is still fundamentally a lagging average, it is less useful in choppy, directionless markets, where even a smooth line will produce false crossovers as price oscillates around it. It is also not a mean-reversion or overbought tool, so do not ask it to call reversals; ask it to describe and follow trends. When a market is ranging, a smoother, longer T3 setting will at least reduce the number of false signals compared with a fast average.
Strategies that use it
The trend-filter strategy uses a longer, smoother T3 to define bias — only take long trades while price and the T3 slope are up, only shorts while they are down — and sources actual entries from a faster tool. The crossover strategy trades price crossing the T3 line, going long on a close above and short on a close below, and works best with the length and volume factor tuned so the line is smooth enough to avoid noise but fast enough to catch turns. A dual-T3 strategy plots two lengths and trades their crossovers, buying when the faster T3 crosses above the slower and selling when it crosses below, which the smoothing makes far cleaner than an EMA pair. In each case, raising the volume factor sharpens responsiveness when signals feel late, and lowering it calms things when whipsaws mount.
Combining it with other indicators
As a smooth trend line, T3 pairs well with tools that judge trend strength and momentum. ADX confirms whether the trend T3 is tracing is strong enough to trade, keeping you from acting on crossovers in a range. A momentum oscillator such as RSI or the stochastic times entries in the direction T3 defines, letting the average set the bias while the oscillator finds the pullback. MACD, itself built on EMAs, complements T3 by adding a momentum read to the trend read. Volume confirms that a T3 crossover has participation behind it. Support and resistance give the crossover a price context. The recurring pattern is to let the smooth T3 define and follow the trend while a strength or momentum tool confirms that the trend is real and times the entry within it.
Where it fails
Despite its clever construction, T3 is still a lagging moving average, so it confirms turns rather than predicting them and will always be late at a sharp reversal. Its signature pitfall is the volume factor: set too high in pursuit of responsiveness, it reintroduces exactly the overshoot and whipsaw the indicator was built to remove, and the line can wiggle across price in choppy conditions. The extra parameter also adds a tuning burden and the temptation to over-optimise to past data. In a ranging market T3, like any average, generates false crossovers as price oscillates around it. And because it is smooth, a poorly chosen long setting can lag so much that it gives back a large part of a move before signalling an exit. The defences are to match the settings to the market, avoid an aggressive volume factor in choppy instruments, and pair it with a trend-strength filter.
A worked example
Picture a stock beginning a new uptrend on the daily chart. You plot a T3 with length 8 and the default volume factor of 0.7 alongside a standard 8-period EMA for comparison. As price turns up off the low, the EMA reacts but does so with a jagged, stair-stepping line that crosses price back and forth a couple of times, throwing off two false signals. The T3, by contrast, turns up in a single smooth arc and price closes cleanly above it without the head-fakes, giving one clear long signal a bar or two earlier and without the noise. You enter on the clean T3 cross with a stop below the swing low. As the trend runs, price rides above the rising T3 line, which you use as a trailing guide, and you only consider exiting when price closes decisively back below the smooth line — a calmer, more reliable ride than the jittery EMA would have given.