5% Trend (5 Percent Trend): Definition and Formula

Definitions

In plain terms

This trend reacts more slowly because each update takes one twentieth of the newest breadth value and retains nineteen twentieths of its prior state.

Technical

Given input X_t and a previously initialized state, the recurrence is T5_t = 0.05 X_t + 0.95 T5_(t-1); a McClellan-family oscillator subtracts this state from the 10% Trend.

Scope

The 10 and 5 percent constants are methodology facts; initialization, rounding, revision resolution, and missing-session behavior remain separate implementation policies.

Formula

T5_t = 0.05*X_t + 0.95*T5_(t-1)

LaTeX: T^{5}_t=0.05X_t+0.95T^{5}_{t-1}

Symbol	Meaning	Unit
`X_t`	Current declared breadth input	input unit
`T5_t`	Current 5 percent trend state	input unit
`T5_(t-1)`	Previous 5 percent trend state	input unit

Output unit: same as input

Examples

If the prior state is 20 and the new input is 50, the updated 5% Trend is 21.5.

Common misconceptions

The 5% Trend is not a five-session simple moving average.

Concept relationships

Prerequisites

Recursive State

Feeds into

Required by

Where this concept is used

Tutorials planned

These catalogued topics use this concept, but their complete build has not shipped yet.

D04-F02-A01 Important
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D07-F01-A02 Mentioned

Evidence and governance

Calculating the McClellan Oscillator McClellan Financial Publications · first party methodology
Supports: preferred label, technical definition, formula, units
Limits: Does not prescribe one universal initialization, missing-session, revision-resolution, rounding, or software interface policy.

Reviewed by: Islam Baraka
Last reviewed: 2026-07-26
Next review: 2027-07-26
Record status: published

Written by

Islam Baraka

Fintech engineer building market-data and financial systems, and the author of every article, glossary record, and reference implementation on The Fintech Builder.