Direct Answer
Tim Tillson's T3 applies a generalized double exponential smoothing step six times and combines the last four results using a volume factor, creating a smooth average with less lag than a plain multiple EMA. It is read like any trend line: price above a rising T3 suggests an uptrend and below a falling T3 a downtrend. Six chained stages need a long warm-up period, and the result can overshoot price after sharp reversals.
T3 Moving Average: Formula, Meaning, Signals, Examples and How to Use It
How Is T3 Moving Average Calculated?
Tim Tillson's T3 applies a generalized double exponential smoothing step six times and combines the last four results using a volume factor, creating a smooth average with less lag than a plain multiple EMA.
Formula: T3 = c1*e6 + c2*e5 + c3*e4 + c4*e3, with c1 = -v^3, c2 = 3v^2 + 3v^3, c3 = -6v^2 - 3v - 3v^3, c4 = 1 + 3v + v^3 + 3v^2
Inputs:
- Prices
- Period n for each EMA stage
- Volume factor v (0.7 is commonly used)
- Six chained exponential moving averages e1 to e6
Worked example. With a volume factor of 0.7, the weight c4 applied to the third smoothing stage is 4.913. The inputs are illustrative numbers, not market data.
Reading it. It is read like any trend line: price above a rising T3 suggests an uptrend and below a falling T3 a downtrend. Raising the volume factor makes the average faster but increases overshoot.
Limits. Six chained stages need a long warm-up period, and the result can overshoot price after sharp reversals. The volume factor name is misleading, as it has nothing to do with trading volume.
What is T3 Moving Average?
Tim Tillson's T3 applies a generalized double exponential smoothing step six times and combines the last four results using a volume factor, creating a smooth average with less lag than a plain multiple EMA.
How to use T3 Moving Average
It is read like any trend line: price above a rising T3 suggests an uptrend and below a falling T3 a downtrend. Raising the volume factor makes the average faster but increases overshoot. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- Chaining six smoothing stages with weighted coefficients gives a very smooth line while the combination offsets part of the delay.
- The single factor v, between 0 and 1, controls the trade-off, moving the line between a lagged smooth form and a faster one.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- The combination of positive and negative coefficients means the output can fall outside the range of recent prices.
- The commonly used v of 0.7 is a convention rather than a derived optimum, and the line changes noticeably with it.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is T3 Moving Average a buy or sell signal?
No. It is read like any trend line: price above a rising T3 suggests an uptrend and below a falling T3 a downtrend. Six chained stages need a long warm-up period, and the result can overshoot price after sharp reversals. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for T3 Moving Average?
T3 Moving Average takes these inputs: prices; period n for each EMA stage; volume factor v (0.7 is commonly used). There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner.
Can T3 Moving Average be used by itself?
Six chained stages need a long warm-up period, and the result can overshoot price after sharp reversals. The volume factor name is misleading, as it has nothing to do with trading volume. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does T3 Moving Average work on every timeframe?
The calculation (T3 = c1*e6 + c2*e5 + c3*e4 + c4*e3, with c1 = -v^3, c2 = 3v^2 + 3v^3, c3 = -6v^2 - 3v - 3v^3, c4 = 1 + 3v + v^3 + 3v^2) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does T3 Moving Average give false signals?
The combination of positive and negative coefficients means the output can fall outside the range of recent prices. The commonly used v of 0.7 is a convention rather than a derived optimum, and the line changes noticeably with it. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should T3 Moving Average be backtested?
Rebuild T3 Moving Average from prices using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.