Ifish KAMA

Kaufman’s Adaptive Moving Average (KAMA) was developed by American quantitative financial theorist, Perry J. Kaufman, in 1998. The technique began in 1972 but Kaufman officially presented it to the public much later, through his book, “Trading Systems and Methods.” Unlike other moving averages, Kaufman’s Adaptive Moving Average accounts not only for price action but also for Market Volatility.
When market volatility is low, Kaufman’s Adaptive Moving Average remains near the current market price, but when volatility increases, it will lag behind. What the KAMA indicator aims to do is filter out “market noise” – insignificant, temporary surges in price action. One of the primary weaknesses of traditional moving averages is that when used for trading signals, they tend to generate many false signals. The KAMA indicator seeks to lessen this tendency – generate fewer false signals – by not responding to short-term, insignificant price movements.
Traders generally use the moving average indicator to identify market trend and reversals.

When calculating Kaufman’s Adaptive Moving Average, the following standard settings are used:
10 – Number of periods for the Efficiency Ratio
2 – Number of periods for the fastest exponential moving average
30 – Number of periods for the slowest exponential moving average

One of the uses of Kaufman’s Adaptive Moving Average is to identify the general trend of current market price action. Basically, when the KAMA indicator line is moving lower, it indicates the existence of a downtrend. On the other hand, when the KAMA line is moving higher, it shows an uptrend. As compared to the regular MA.
the KAMA indicator is less likely to generate false signals that may cause a trader to incur losses.
Kaufman’s Adaptive Moving Average can also be used to spot the beginning of new trends and pinpoint trend reversal points. One way to do this is by plotting two KAMA lines on a chart – one with a more short-term moving average and another with a longer-term moving average. When a faster KAMA line crosses above a slower KAMA line, this indicates a change from a downtrend to an uptrend. The trader can take a long position and close the trade when the faster MA line crosses back to beneath the slower MA line. Trading signals can also be derived by the movement of market price in relation to Kaufman’s Adaptive Moving Average. If price crosses from below to above the KAMA line, that is a bullish (buy) signal. Conversely, price falling from above the KAMA line to below it is a bearish (sell) signal.
Kama will color flip automatically when cross happens.
green = bullish flip
red = bearish flip
Ma line by its self just great to find s/r levels.
the periods that I like to use as input, I prefer fib sequence numbers
ea: 3,13, 21, 34 etc.
For more info or trading concept check my profile.

版本注释:

Band color fills added for trend direction