Kalman Filter indicator is a trend-following VertexFX client side VTL indicator that uses the concept of digital filter based on velocity (speed in price changes), and error correction (eliminating whipsaws and noise).
In the first step, we calculate the change in price. This value is smoothed and sharpened with K and SHARPNESS factors. The velocity is calculated based on the threshold and the smoothed values. When the velocity is positive (bullish), the indicator turns BLUE, wheras when the velocity is negative, the indicator turns RED.
BUY - Place Buy position trade when Kalman Filter indicator turns BLUE. Do not open BUY trade if candle gaps up and closes above the indicator.
SELL - Place Sell position trade when Kalman Filter indicator turns RED. Do not open SELL trade if candle gaps down and closes below the indicator.