**What distinguishes this indicator?**

A Compound Ratio Weighted Moving Average ("CoRA") is a Moving Average that, regardless of its length, has very little lag and that can be relied on to accurately track price movements and fluctuations - compared to other types of Moving Averages.

**By combining**

*multiple*Compound Ratio Weighted Moving Averages*you can identify the trend better and more reliably*. This is where "CoRA Ribbon" comes in.*The original study, which supported one CoRA Wave, comes from RedKTrader and was introduced as "RedK Compound Ratio Moving Average (CoRa_Wave)”. Thanks to him for the great work!*

**What was improved or added to this version of the indicator?**

With this version of the indicator, up to 5 waves of Compound Ratio Moving Averages with different lengths can be combined and output to one "CoRA Ribbon".

Alerts were implemented. You can be notified e.g. in the event of

- changes in direction of each single CoRA Wave

- a trend change, which is determined on the basis of all 5 CoRA Waves

**A CoRA Wave compared to other Moving Averages**- CoRa Waves are less lagging behind

**A suggestion for interpretation of “CoRA Ribbon”:**

Since CoRA Ribbon can help you to identify the trend better and more reliably, this indicator provides a good baseline for your strategy, but should always be used in conjunction with other indicators or market analysis.

By adjusting the length of each individual wave, you can adapt "CoRA Ribbon" to your trading style - whether it is more aggressive or more cautious.

The following general rules can be formulated:

- If the Ribbon changes its color to green, this can be interpreted as a buy signal.

- If the Ribbon changes its color to red, this can be interpreted as a sell signal.

*Good to know:*The default settings have been selected for timeframe lower than 15 minutes. Adjust them and the indicator will do a great job on higher timeframes too. Please remember to test carefully after every change before the changes are applied to your live trading.

**Background “Compound Ratio Weighted Average”**- provided by "RedKTrader"

A Compound Ratio Weighted Average is a moving average where the weights increase in a "logarithmically linear" way - from the furthest point in the data to the current point.

The formula to calculate these weights work in a similar way to how "compound ratio" works: you start with an initial amount, then add a consistent "ratio of the cumulative prior sum" each period until you reach the end amount. The result is the "step ratio" between the weights is consistent - This is not the case with linear-weighted “Moving Average Weighted” ( WMA ) or “Exponential Moving Average” ( EMA )

For example, if you consider a Weighted Moving Average ( WMA ) of length 5, the weights will be (from the furthest point towards the most current) 1, 2, 3, 4, 5 -- we can see that the ratio between these weights are inconsistent. in fact, the ratio between the 2 furthest points is 2:1, but the ratio between the most recent points is 5:4. the ratio is inconsistent, and in fact, more recent points are not getting the best weights they should get to counter-act the lag effect. Using the Compound Ratio approach addresses that point.

A key advantage here is that we can significantly reduce the "tail weight" - which is "relatively" large in other Moving Averages.

*A Compound Ratio Weighted Moving Average is a moving average that has very little lag and that can be relied on to accurately track price movements and fluctuations.*

**Use or modify the code, invite us for a coffee , ... most importantly: have a lot of fun and success with this indicator**

The code is commented - please don't hesitate to use it as needed or customize it further ... and if you are satisfied and even successful with this indicator, maybe buy us a coffee ;-)

The original developer (RedKTrader) and I (consilus) are curious to see how our indicators will develop through further ideas - so please keep us updated.

**The following functions have been implemented:**

- Settings: Several types of moving averages have been added to choose from to smooth the compound ratio weight: "EMA", "SMA", "WMA"

- Settings: Source can now be defined individually for each CoRA Wave

- Settings & Plot & Alert: The option of displaying two more ribbons and associated alerts has been added.

- Settings: How many waves must point in the same direction to initiate a change of direction for Ribbon 3, can now be defined

**The following functions have been improved or modified:**

- Settings: Minimum value for length set to 2

- Code cleanup: color_fill_change removed, since it is not required

- Interface: Renaming and rephrasing to improve usability

- Alerts: added a description to the "CoRA Ribbon: Direction Change"-alerts, since they are triggered if at least a in settings definable number of CoRA Waves point in the same direction.

Please note the suggestions on how the new functions can be used: CoRA Ribbons - Two ideas how to use them

#revision: lv21 (dv553)