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Note: This download requires NinjaTrader 8 release 8.1.3 or newer.

Overview of Super Passband Filter

The Super Passband Filter by John Ehlers operates on the principle of selectively allowing through only the most pertinent frequencies in market data, thus avoiding the pitfalls of both high-frequency noise and irrelevant low-frequency trends. This filter is particularly useful in volatile markets, as it helps in distinguishing genuine market movements from mere noise, enabling traders to make decisions with greater confidence.

Functionality and Mechanism

The Super Passband Filter is calculated from a combination of two exponential moving averages (EMAs) applied in a z-transform method to further reduce output lag. This results in a main plot line that effectively captures the essential trends (note that the indicator allows for different type of averages to be applied):

• Smoothing Technique: The filter smooths market data using EMAs, reducing the lag often seen in traditional smoothing methods by applying advanced digital filtering techniques.
• RMS Lines: The filter uses a root mean square (RMS) calculation to create boundary lines (+RMS and -RMS). These lines help in defining the volatility and stability of the market, offering a clear indication of when the market is too choppy for reliable trading.

Trading Rules

John Ehlers specifies straightforward trading rules for the Super Passband Filter to maximize its effectiveness:

• Buy Signal: Initiate a buy order when the Super Passband Filter line crosses above the -RMS line. This indicates an upward trend clear of lower boundary noise.
• Short Signal: Enter a short position when the Super Passband Filter line crosses below the +RMS line, signaling a potential downward trend.
• Exit Long: Exit a long position if the Super Passband Filter line crosses below either its RMS or -RMS lines, which may indicate a false entry signal previously identified.
• Cover Short: Cover a short position when the Super Passband Filter line crosses above either its -RMS or +RMS lines, suggesting a false entry signal previously identified.

Super Passband Filter Features

The indicator offers several customizable features:

• Custom Input: Choose from a variety of inputs (Close, Open, VWAP, etc...).
• Custom averages: Select from a variaty of averages. The original design by Ehlers utilized the exponential moving average.
• Apply custom trend color to the curve.
• Implied tops and bottoms can also be shaded selectively.

Review the screenshots and video for setup options.

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